Private label has been growing at twice the rate of famous household brands over the last 10 years. In fact sales of Wal-Mart’s private label brands is worth more than Unilever’s, PepsiCo’s and Coca-Cola’s put together and in more consolidated and sophisticated markets such as the UK, private label already accounts for about 50% of the shopping basket.
So it’s hardly surprising that brand owners tend to view it as threat to their business, while retailers view it as an ever more important part of theirs. So who’s right? What does the future hold? Who’s going to win and who’s going to lose out with private label?
In December 2006 and January 2007, Saatchi & Saatchi X in partnership with POPAI, undertook a global study as the basis for a forthcoming book on private label due to be published in November by Keith Lincoln and Lars Thomassen (Kogan Page)
This study is unique in that it provides an all party perspective exploring the attitudes and motivations of all three private label participants; the retailers that develop and sell them, the brands that compete and often manufacture them and of course the shopper who ultimately buys them and determines their ongoing future.
With the resources of the Saatchi & Saatchi network and the global membership base of POPAI, over fifty brand owners and retailers in North America, Western Europe & East Asia were surveyed from CPG companies through to fashion, DIY, Health & Beauty and Electronics and thousands of shoppers also took part.
Our belief is that the third and most influential party in the equation is yet to be fully taken into account. The simple fact of the matter is that shoppers understand the value of private label better than the brand owners or retailers. Shoppers realize that both brands and private label provide a balanced portfolio of price, quality, choice, convenience, and innovation. Both are important. Both have their limits, but both are required.
Extract from the Global Research & Analysis Highlights:
‘The very first step in a winning strategy for both brand owners and retailers is in a commitment to work together with private label, collaborating and stretching the idea of partnership beyond pure production line capacity, innovation and profitability towards ideas that are based around the principles of ‘Joint Value Innovation’.
These 10 principles help us probe into every facet of private label, unlock its potential and predict the impact it can have. Joint Value Innovation provides us with a framework for helping brand owners and retailers realise, as our research shows, that private label isn’t a threat or a Trojan horse. It really is an opportunity.'
POPAI Members can download full report, free until October 1, 2007. For more information contact Kaijsa E. Kurstin at POPAI, KKurstin@POPAI.COM, 703-373-8811.