This report explores the dynamics of own label and manufacturer brands in the Irish
retail environment.
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To understand current shopper perceptions about own-label and brands we
conducted a comprehensive programme of research which included:
Eight paired depth shopper safaris across Tesco, Dunnes and SuperValu to help us
understand shopper thoughts and experiences of own label and manufacturer
brands. This involved a process where respondents were interviewed first, visited
the store, and then interviewed in a more reflective stage afterwards. We included
young singles, young families and mature families.
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The main thrust of the research was an online study of 1,000 grocery shoppers to get
a “belts and braces” understanding of Own label and provide clarity around the
balance of Own label and brands in store across eight categories.
We also included a visual assessment of shopper response to various scenarios of
own label share of shelf in store.
Our research partners are Red C.
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The eight categories we included in the study are milk, tea, hot cereals, chilled ready
meals, cheddar cheese, sauces and relishes, cooked sliced ham and gluten free range.
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We will start by looking at the role own label plays today.
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Looking at some of the Kantar figures with which we are all so familiar – In volume
share, we see Own Label share of Total Food has grown from 42.0% % at the end of
2010, to 48.4% at the end of 2014 – a big increase over a four year period.
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By categories the level of Own label share varies - from those that are dominated by
manufacturer brands - such as crisps, chocolate confectionery, amongst others – to
those that are dominated by Own Label: cheese, fresh meat and fish, and eggs.
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In most categories Own Brand has shaken it up for shoppers – and has changed how
manufacturer brands operate to compete.
Long gone are the days of no-frills packaging intended only for those on a tight
budget—
own label brands are no longer viewed simply as low-cost alternatives to
manufacturer brands; they’re increasingly high-quality products that fulfil consumer
needs across a variety of price points.
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Shoppers have taken notice of this shift and are responding positively. Today,
perceptions about private label are overwhelmingly favourable—
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Almost three-quarters of respondents (72%) say they are buying more retailer own
brands nowadays. A door once opened by economic necessity has widened to
include a variety of Own Label products that remain viable and trusted for shoppers
across the country.
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And Own Brand is here to stay. Three quarters of shoppers agree Own Label is a
smart option and a good deal.
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Word of Mouth is fuelling this growth. 49% of shoppers across all categories agree
that “It’s just the same thing with a different label.”
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And in some instances Own label can also command loyalty.
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The figures from this study and our Brand Health Check Study show that when Ownbrand experiences are positive it can result in a loyalty that exceeds that of traditional
brands….
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The shopper argument is simple…. “If you try it and its just as good but it costs a lot
less, why would you pay extra for the big brand?”
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As a consequence brands are under pressure.
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53% agree with the statement ‘I don’t care about brands really.’
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More importantly the age profile of those agreeing is concerning - with younger
shoppers having less brand allegiance. If the marketing adage of get them young and
they will stay with you is true, brands are in trouble. Two thirds of 18-24 year olds
agree they don’t care about brands, while this more than halves for the 65 year olds
and older.
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We know the solution is to create strong brands to take on the Own Brand
alternatives and win – via Product advantage and emotional connections – something
we will explore in more
detail later in my presentation.
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Let’s look a bit closer behind the shopper profile for Own Label and brands.
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For eight in ten shoppers, own label features in their basket. Our study segmented
shoppers into three groups: ‘Ownies’ – those that will always choose own label when
possible;
‘Pragmatists’ - shoppers who have a balanced basket, featuring a mix of Own Brand
and Manufacturer Brands;
and ‘Brandies’ – shoppers that are strongly oriented towards brands.
The majority of shoppers are Pragmatists representing 44% of shoppers, but ‘Ownies’
at 34% outnumber ‘Brandies’ who account for 23% of shoppers.
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Looking behind these numbers is interesting.
As we saw earlier, there is a much higher emphasis on own brand for younger
shoppers, and much less interest in brands.
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While on the other hand, the profile of Brandies is much older, with only 13% of 1824 year olds claiming that they are brandies while the figure is 37% for the 65s and
older.
Will Brandies die off and leave Ownies to continue to grow as they get older?
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Remember that film with Leonardo diCarprio as the conman?
It’s not unfair to call this generation coming through the “catch me if you can”
generation.
They don’t watch much TV, they largely ignore advertising online, they don’t read a
paper or subscribe to magazines, they skip around on radio channels
It is Very difficult to have a conversation with them about your brands.
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Here’s an interesting move by Aldi, going after the “catch me if you can” generation.
Hop on the Aldi Bus is vailable at Trinity Hall in Dartry – student accommodations,
likewise Sligo IT– and I’m sure others, if the pilot works.
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This chart shows in addition to the younger people, that those who favour Own Label
are more likely to have children and in the family life stage.
The study also shows that as expected there is a higher percentage of Ownies
amongst the C2DE social class and students. While Famers have much more affinity
to branded products.
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In this section I’d like to delve a little deeper into the shopper responses to the eight
categories included in the study. I’ll look into why shoppers buy either own label or
branded, and what they believe is the right mix in each category.
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We know from the Kantar data that Own Label penetration varies by category.
Here too we see shopper acceptance of Own Brand differs across the categories
surveyed.
At the one end there is higher preference for brands in categories like tea, and in
contrast higher preference for Own Brands in the milk category.
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Among those that regularly purchase these categories, the majority believe the
balance of own Label and branded is just about right.
There are a couple of exceptions – in the Gluten Free category shoppers express a
desire for more choice overall - wanting both more Own Label and more branded
products.
In chilled ready meals there are more shoppers expressing an interest in more Own
Label options.
Pretty well served overall, there is a sense of balance.
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Here we see the prevalence of the belief that Own Brand options are just the same as
manufacturer brands.
This differs by category, with milk having the highest agreement, but across the eight
categories 49% of shoppers believe that most Own Label is the same. In chilled ready
meals and sauces there is the least agreement that the Own Label products are the
same as the Brands in the category.
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Let’s look at milk - a category where Own Label is winning.
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Among Milk Buyers 60% favour buying an own-brand option.
Among these 8 in 10 say the reason is cost, BUT INTERESTINGLY 7 IN 10 BELIEVE IT TO
BE EXACTLY THE SAME AS BRANDED MILK….
There is minimal differentiation and low brand equity. This is also a category with
high price sensitivity and high purchase frequency - milk is a low-involvement, lowrisk purchase. Milk has a fast purchase cycle, making its price more noticeable to
most shoppers.
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Among those milk buyers who choose branded options, the reason is perceived
Quality and Taste advantage - ‘I like my milk so it has to be Avonmore, its creamier’.
For 1 in 8 a specific product or range from a brand is better than Own Brand –
highlighting the need for innovation in the branded sector.
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A good example in a commodity category like milk of building brand value through
differentiation is Avonmore SuperMilk.
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Here we see a correspondence map whereby in shoppers’ minds SuperMilk sits way
ahead of all competitors across all attributes, and is the only one that ‘Offers a real
advantage over other brands’; ‘Is worth paying more for’ and ‘I would recommend
this brand to family and friends’.
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Let’s look at another category where Own Label is strong – chilled ready meals.
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43% prefer Own Label – largely because of affordability and price, but also because
quality is not questioned - 6 out of 10 shoppers saying it is great.
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There is a strong Own Label offering here – in many stores the Own Brand offer is
leading the field in quality and range, especially for ethnic tastes; and high end
mimicking M&S quality and packaging with retailers offering relevant and
contemporary Dine in Deals.
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The Cheddar cheese category also sees Own Label being relatively strong.
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Affordability and quality is regarded as high among those purchasing Own Label; but
critically here we see 6 out of 10 saying Own Label is the same as branded.
There is minimal product differentiation and Own Label has copied new variants in
terms of shredded or sliced.
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There is some loyalty to local brands, such as Kilmeaden, Charleville say.
But less confidence in the assured origin of some brands – there has been a loss of
authenticity in some brands, weakening the loyalty or reason to buy most often. “My
favourite brand is not from where it says it is anymore!”
Strong Own label offers are given prominence in store – positioned at eye level in
Tesco and dominating the shopper experience, and offering appreciable savings. Aldi
/ Lidl have pushed the door open with their Own Label brands price offers. These are
especially popular in sliced/ grated variants…essentially ‘premium products’ offered
at competitive prices.
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Tea is a great category example of when brands win. There is a strong resistance to
Own Label.
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Among regular tea drinkers, 8 out of ten shoppers prefer manufacturer brands.
Taste advantage is very clear. Tea brands are seen to define families in Ireland - there
is emotional connection and habit with consumers and this is strongly supported by
brand activity.
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What makes it so difficult for Own Label to break into shopper repertoires?
For those who do buy Own Label it is mostly around price.
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There is high product differentiation in terms of taste - shoppers’ belief in brand
superiority of taste limits any interest in trial of alternatives;
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And marketing spend is high in this category and this investment has created strong
brand loyalty.
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Porridge is another good category example when brands win.
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67% of shoppers favour branded porridge. Amongst those preferring brands it is not
about affordability – it is again about quality and taste. Emotional connection to the
‘start of the day’ remains strong…. cereal is an area of notorious resistance to Own
Label.
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This chart attempts to show the relative strength of brand equity for manufacturer
brands versus Own Label.
Across categories we showed the top 4 brands and top 4 Own Label options at
random.
If the endorsements on a particular statement are much higher for the brands offered
to respondents than for the Own Label option offered, the brands in that category
have succeeded in building strong emotional and rational advantage over Own Label.
Brands within the Porridge category have certainly succeeded.
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Even though the product may seem ‘basic’ there is a reluctance to try anything else
“own label ones are like sawdust’.
Branded products are seen to offer good value; they are relatively inexpensive and
last a long time. Innovation in terms of product variants – flavour, formats and
packaging keep shoppers interested and engaged in brands.
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Sauces and relishes is an interesting category – one with two stories. Own Label is
not that strong in shoppers’ preferences, just 31%.
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Own Label is resisted in ketchup/mayonnaise, where distinctive tastes are well known
and thought to be unique, e.g. Hellman’s or Heinz.
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On the other side, Relish is a less frequent purchase, it has less brand loyalty and
there is limited price awareness.
It is a category in which Own Label stands on its own two feet relative to brands.
There is not a sense of Me Too –just copying or re-packaging branded offerings. Own
Label is often seen to be high end, offering new flavours and variants worth trying –
the quality is as good as price.
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SuperValu has gone as far as having their Own Label endorsed/made by a
manufacturer brand!
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For sliced cooked ham where 34% of shoppers express a desire for Own Label, it is all
about affordability. There is great variation in quality in this category, with shoppers
often visually making purchase decisions.
Traditionally Own Label was seen as a lower quality but now it is delivering strongly at
the higher end – it is thought to come up with new flavours and variants as quick, if
not quicker than manufacturer brands.
Brands are considered to still offer uniqueness in speciality ham. Many of the
shoppers we spoke to mentioned packaging style and how it can differentiate quality
standards; often with ‘old-fashioned’ packaging emerging positively.
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Gluten Free is our last category.
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6 in 10 favour manufacturer brands. But Own Label is welcomed– it is seen to offer
extra value in a category associated with expense.
Own Label is given some credit for growing this category – ‘normalising’ the range.
Branded offer in shoppers’ eyes is fragmented: brands tend to specialise in one area
only or offer a very small range. Packaging and product language is sometimes
challenging in information: not very accessible or helpful. Brands that cut through this
and help shoppers are favoured.
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Kelkin is the strongest single brand in the category: authentic, trusted, quality Irish
and unequivocal in all aspects of health.
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I’d like to quickly look at finding the equilibrium of Own Label and Manufacturer
Brands.
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For retailers and shoppers it is about getting the right mix. Here we see for most
regular shoppers The Balance is Right. By and large shoppers are happy with what
they are finding on shelf.
There is some appetite for more Own Label in the convenience channel.
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6 out of 10 agreeing that ‘On average stores have just the right amount of own brand
options’.
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But are there signs that we are beginning to see the balance being tipped?
We see here there is little appetite for more own brand. 63% of shoppers believe
retailers have the right amount of Own Label available.
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There is some push back
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Four in ten shoppers actually agree that ‘Stores are pushing own brands too much’.
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Most importantly, 3 out of 4 shoppers agree ‘I would hate to see brands disappearing
due to own brands’.
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A few WATCH OUTS for retailers are emerging. 4 out of 10 shoppers agree with “I
question the quality of retailers with too many OB options”
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And 1 in 5 agree with ‘I have found myself avoiding stores with too many Own
Brands”.
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In the visual assessment we asked shoppers to evaluate various scenarios of own
label share of shelf in store – like the examples seen here
We showed them shelfs with a limited own brand range
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A shelf with maximum own brand
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And one where the mix was balanced between own label and brand - we found
variations by category. BUT a composite of all 8 categories finds that overall shoppers
on average have a preference for less Own Brand options…..but it does vary by
category.
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Here we see porridge – there is a very strong preference among buyers for minimal
Own Label.
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In Chilled ready meals there is a preference for more Own Label.
There may be signs that the balance has been tipped, and perhaps retailers have
gone a bit too far with the range and depth of their Own Label offerings – but like
most things as it varies by category, multiple influences must be taken into account.
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The retail environment has certainly changed over the past decades, and perhaps we
have reached equilibrium level with own label and brands. Our approach to brand
building equally needs to evolve.
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We have seen from the category analysis that there are some common themes:
Brands win when there is high product differentiation, high innovation rate and
strong marketing support that builds brand equity.
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Own label tends to win when the category has high price sensitivity and high
purchase frequency; and when there is minimal differentiation and low brand equity,
and low innovation for the category.
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This is an old joke – but that doesn’t make it any less true.
Today we are in a retail landscape where consumers are savy, sceptical and wellinformed about products and choices; and we are in the digital era that offers new
opportunities.
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Conventional marketing of the past decades was about mass marketing, but brand
building of today needs to move away from the ‘push’ of advertising in mass media to
a new form of consumer ‘pull’ opt-in marketing with a focus on product quality,
added value and a closer sense of connection to the consumer.
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Creating brands that people want to emotionally and literally ‘opt-into’ is the ultimate
goal. This is not necessarily a more difficult task than the brand building of previous
decades, it is just a different one.
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Let’s think back to the Brand Forum presentation 18 months ago on ‘Brands that
Stand for Something’. Ethnographer and leadership expert Simon Sinek argues that
as individuals and companies, everything that we say and do is a symbol of who we
are.
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And it is only when we communicate our beliefs authentically that we can attract
others to our cause, and form the bonds that will empower us to achieve truly great
things.
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He stresses the importance of trust, authenticity, and meaning – and that brands that
stand for something think, act and communicate from the inside-out, from the WHY
to the what. Standing for something starts with the WHY, not the how or what.
The WHY is at the core and it should connect with everything else that the brand
should do.
WHY …why we do it, our purpose, our belief, our cause, why you should care
HOW… how we do it, how we are better, our USP
WHAT……what we do
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Brands need to send a simple clear message to articulate their stance. Consumers
have enough complexity in their lives to have to spend time decoding what you stand
for, they cannot be expected to make an effort to do so.
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The stance, the WHY needs to be simply and clearly articulated. It needs to be
tangible, single minded and easy to understand.
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Give consumers an easy sound-bite that they can, in turn, use when evangelising
about you.
APPLE REINVENTS THE PHONE – perfect sound-bite – appeared in every news outlet
for the next 6 months
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Target the right people to talk to by selecting the right communication channels to
use.
Mass media are not always suitable for all topics - make sure to send the right
message to the right audience.
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You might know Steven Wright, a US Comedian.
People are asking brands to be honest – tell their story fairly, humbly. Truthful brands
are winning the respect of consumers by saying what they can do as plainly as
possible, and admitting what they can't do. They are confident in the worthiness of
their offering.
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Truths are not only product truths, but can be any built-in aspect of a brand that is
exceptional: customer experience, service, company values, brand purpose, etc.
We need to build our brands differently as a result of the changes brought on by the
digital age: we need to invest in exceeding expectations with our product and tell our
story truthfully.
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You as an owner of an Irish, quality brand can develop a close relationship with your
shopper and consumer; it is much more difficult for the retailer.
This is not a quarter to quarter, keep track of the numbers game – it’s a long game.
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It is only when we find our compelling narrative and we tell it so that it evokes people
to want to opt in both emotionally and rationally that we will win with our brand.
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Let’s get those 18-35 year olds!
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