Threat of own brands continues as economy recovers
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Consumers’ shift to own label goods from branded FMCG products is permanent according to market research company Verdict Research.
As the economy stabilises, Verdict predicts that the lower tier ranges, such as Tesco’s Discount Brands, introduced to safeguard footfall, will loose momentum and consumers will return to higher end ranges including organic and Fairtrade.
To compete with private labels, manufacturers of branded FMCG goods should look towards new distribution channels such as opening their own stores or launching value versions of branded goods.
Premium own labels are already showing signs of recovery and The Co-operative Group posted strong results for its top tier range last week.
Readers' comments (2)
Christian Seiersen | Mon, 24 Aug 2009 1:06 pm
What this research invariably points to is the requirement of food retailers to have a malleable consumer image. This allows them to tailor their appeal according to the economic climate. In a recession, focus on cheap, honest food and when we emerge from this, provide a more high-end appeal. Thus, we arrive at the golden arches of Macdonalds, generally agreed to be monsters of fast food and rightly so. However if you cast an analytical eye of their public relations you will see an image which ebbs and flows with the economic climate. When times were good, we were subjected to new 'gourmet' offerings like glorious salads and even ciabatta bread was recruited in this market push. However, at the earliest sign of consumers tightening their purse strings Mcdonalds were able to retreat behind their Big Macs and Cheeseburgers, and to good effect. So maybe all brands can take a leaf out of Maccy D's greasy and sugar filled book.
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Anonymous | Mon, 24 Aug 2009 2:35 pm
Of course the retailers want to promote their "own brand". But within the current "legal" framework it is impossible for a brand owner (e.g. Persil / Heinz / Quaker Oats etc) to challenge the price that their own product are sold on the shelves at. Possibly a "branded only" Ocado rival is the only solution.
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