Private Labels in Retailing 2009

Introduction

Verdict Research: This new report provides a useful insight into the latest private label developments of retailers across different sectors including food & grocery, electricals and DIY. With a number of case studies spanning across different countries and retail sectors, the report identifies and examines the key strategies for retailers to develop and further optimise their private label offer.

Scope

• This report provides accurate insights into key trends and future developments of retailers' private label propositions.
• In-depth discussion and analysis of the strategies of major retailers and their private label offer.
• Strategic analysis of the key factors driving private label development across different sectors and product categories.
• Cross country and sector overview of retailers' private label. Analysis of best practice private label strategies across different industries.

Highlights

In the wake of the global financial crisis and subsequent recession there has been a resurgence of private label. With price being the overriding factor driving most consumers' purchasing decisions, for retailers, a relentless focus on value is, now more than ever, the name of the game. Private label has been at the forefront of this strategy.

Major grocery players are extending their private label proposition as a response to the discounter threat and greater uptake of own brand products. At this challenging time private label offers an array of benefits for retailers including better margins and increased brand loyalty. However the lower cost reduces retailers' top-line sales.

In the home related sectors there is a significant opportunity for private label development of eco-friendly and energy efficient products. These products will help retailers to differentiate their offer and appeal to changing consumer attitudes for more environmentally sustainable products, while at the same time producing higher margins.

Reasons to Purchase

• Learn how difficult market conditions are driving private label sales and what the outlook for retailers' private label offer will be going forward.
• Understand how evolving consumer behaviour is forcing retailers to develop new private label strategies to counter the discounters.
• Benchmark your private label strategy against what others in the industry are doing.

CHAPTER 1 EXECUTIVE SUMMARY 6
Key findings 6
Main conclusions 7
 

CHAPTER 2 ECONOMIC OVERVIEW 10
Main messages 10
GDP Top 10 11
Top 10 GDP forecasts - bleak outlook 12
GDP: midranking eight 13
Midranking eight - GDP may fall for all after revisions 14
GDP: smaller nine 15
Smaller nine - GDP reductions bad for Baltics 16
Consumer expenditure 17
Structure 19
Inflation falls rapidly 21
HICP annual averages 22
Savings rate to increase sharply 24
Euro interest rate turns downwards 25
Other interest rates 27
Unemployment - lagging indicator 28

CHAPTER 3 EU RETAIL SPEND 30
Latest expenditure trends 30

CHAPTER 4 EU PRIVATE LABEL MARKET 33
Private label market share by volume - on the rise 33
Switzerland has top private label penetration due to Migros 35
Discounter Denner now part of Migros 36
Private label market share by value - not far behind 37
Loi Galland makes France a private label anomaly 39
But discounter threat prompts refocus on private label 39
Crisis triggered enhancement of private label offer 40

CHAPTER 5 KEY ISSUES 41
Deflation the major threat 41
Reaction to hard discounters depresses prices further 44
Threat of deflation in wider economy 45

CHAPTER 6 OUTLOOK 46
Organics 47
Managing the supplier relationship 47
Opportunity in non-food 47

CHAPTER 7 GROCERY DISCOUNTERS PROSPER 48
Strategy differences in the private label offer 50
Green retailing - a private label opportunity 51
Non-food a common problem area 52

CHAPTER 8 OTHER GROCERS REACT 53
Private label range innovation, extension and relaunch 55
Evaluation 56

CHAPTER 9 GROCERY CASE STUDIES 59
Carrefour 59
Europe's leading grocer 59
Carrefour private label ranges have been built over 25 years 60
Carrefour launches discount range 60
Carrefour's private label has been extended abroad 63
Casino 66
The original discounter range 66
Casino's discount private label - the first relaunch 70
Coles 72
Private label downunder inspired by the old world 72
Delhaize 73
Revamps US private label 73
US provides template for Belgium 74
Eroski and Mercadona 76
Eroski lowers price of its own brands 76
Mercadona rationalises private label offer and lowers prices 77
Metro Group 79
Caught on the defensive 79
Real adopts good-better-best after many years 79
Sainsbury 82
The Switch and Save campaign 82
Going Back to Basics 83
Non-food an integral part of private label offer 84
Tesco 89
Adds fourth tier to traditional three-tier private label system 89
Discount brand is fourth tier 91
Tesco's private label offer abroad 93
Waitrose 96
Even upmarket Waitrose follows rivals into value essentials 96
US cases: Wal-Mart and Target 98
Catching up 98
US retailers have revamped existing private label offers 98
Wal-Mart upgrades its private label brand 98
Target replaces bull's eye logo with a big arrow 100
DIY CASE STUDIES 102
DIY outlook 102
Energy efficiency will be key driver 103
Eco-friendly product ranges become increasingly common 104
Kingfisher 105
Europe's largest DIY retailer 105
B&Q sets example 107
Praktiker 110
Private label rationalisation 110
Bauhaus 112

CHAPTER 10 ELECTRICALS CASE STUDIES 114
Energy efficiency - future focus 114
Best Buy 116
The world's leading eletricals retailer 116
Metro Group 118
Much to do in private label arena 118

CHAPTER 11 GLOSSARY 119
Definitions 119
Abbreviations 120

List of Tables
Table 1: Monthly HICP rates y-o-y Nov 2008-Apr 2009 21
Table 2: Monthly unemployment rates y-o-y Oct 2008-Mar 2009 28
Table 3: Monthly y-o-y change % in retail spend Oct 2008-Mar 2009 30

List of Figures
Figure 1: GDP for Top 10 countries in EU 2008e 11
Figure 2: GDP forecast change % for Top 10 EU countries 2008 & 2009 12
Figure 3: GDP for midsize eight (€100bn+) countries in EU 2008e 13
Figure 4: GDP forecast change % for middle eight (€100bn+) 2008 & 2009 14
Figure 5: GDP for smaller nine (€100bn-) countries in EU 2008e 15
Figure 6: GDP forecast change % for smaller nine (€100bn-) 2008 & 2009 16
Figure 7: Consumer expenditure of Top 10 EU countries 2007 17
Figure 8: Countries among other 17 in EU with consumer expenditure of €18bn+ 2007 18
Figure 9: Countries among other 17 in EU with consumer expenditure of €18bn- 2007 18
Figure 10: Consumer expenditure as % of GDP 2007 19
Figure 11: Harmonised Index of Consumer Prices - annual average growth of Top 10 EU countries 2007 & 2008 22
Figure 12: Harmonised Index of Consumer Prices - countries among other 17 in EU with annual averages over 4.5% 2007 & 2008 23
Figure 13: Harmonised Index of Consumer Prices - countries among other 17 in EU with annual averages under 4.5% 2007 & 2008 23
Figure 14: Gross household saving % of gross household disposable income (latest data) 2007 24
Figure 15: ECB interest rates 2005-2009 25
Figure 16: Central banks key reference interest rate averages for 2008 27
Figure 17: Grocery private label volume share May 2009e * 33
Figure 18: Grocery private label volume share in selected states May 2009 34
Figure 19: Migros three-tier private label offer 2009 35
Figure 20: Denner private label, Geneva 2009 36
Figure 21: Grocery private label value share May 2009e 37
Figure 22: Grocery private label value share in selected EU states May 2009 38
Figure 23: EU monthly food price change (HICP y-o-y) May 2008-Apr 2009 41
Figure 24: Oil spot price FOB weighted by estimated export volume ($/barrel) - monthly Mar 2008-May 2009 42
Figure 25: Downward spiral of grocery prices in 2009 44
Figure 26: El Corte Inglés low cost Aliada range 2009 55
Figure 27: Leader Price's Le Prix Gagnant value line 2008 57
Figure 28: Leader Price's Le Prix Gagnant brand revamped in 2009 58
Figure 29: Carrefour private label, Calais, 2008 59
Figure 30: Carrefour own brand portfolio 2009 61
Figure 31: Carrefour Discount product examples 2009 62
Figure 32: Carrefour private labels cater for customer segments 2009 63
Figure 33: Carrefour own brand bath & shower products, Thailand 2009 64
Figure 34: Carrefour own brand electronic digital safe, Thailand 2009 65
Figure 35: Casino private label examples 2009 66
Figure 36: Casino Gratos private label promotional campaign 2009 67
Figure 37: Casino own brand portfolio 2009 67
Figure 38: Casino Délices 2009 68
Figure 39: Casino Terre et Saveur 2009 69
Figure 40: Casino Ysiance 2009 69
Figure 41: Casino non-food private label offer 2009 70
Figure 42: Leader Price private labels 2009 71
Figure 43: Delhaize private labels 2009 73
Figure 44: Delhaize private labels 2009 75
Figure 45: Eroski el más barato (the cheapest) campaign 2009 76
Figure 46: Metro private label proposition 2009 79
Figure 47: Real Selection, Real Bio, Real Quality & Tip 2009 80
Figure 48: Sainsbury's three-tier own brands 2009 82
Figure 49: Sainsbury's private label sub brands 2009 83
Figure 50: Sainsbury's TU clothing 2009 85
Figure 51: Sainsbury Basics homewares 2009 86
Figure 52: Sainbury TU homewares 2009 87
Figure 53: Sainsbury Different by Design homewares 2009 88
Figure 54: Tesco's three-tier own brands 2009 89
Figure 55: Tesco private label sub brands 2009 90
Figure 56: Tesco's Discount brand 2008 91
Figure 57: Tesco's Discount brand 2008 92
Figure 58: Tesco Discounter brands in Poland 2009 94
Figure 59: Tesco Value brand international examples 2009 95
Figure 60: Essential Waitrose 2009 96
Figure 61: Wal-Mart's Great Value revamp 2009 99
Figure 62: Target private label revamp 2009 100
Figure 63: Homebase Flawless paint 2009 102
Figure 64: Kingfisher's Colours range 2009 105
Figure 65: Kingfisher Performance Power range 2009 106
Figure 66: B&Q runner bean Scarlet Emperor 2009 108
Figure 67: B&Q loft insulation 2009 109
Figure 68: Praktiker's Faust private label range 2009 110
Figure 69: Max Bahr private label 2009 112
Figure 70: Best Buy - private label 2009 116
Figure 71: Sungoo LCD TV, Metro's private label brand 2009 118