Own-label eats in to branded market share

The warning followed the publication of new data which showed that sales of own-label foods grew by 1.32% between 2011 and 2013. The data, commissioned from Kantar Worldpanel by marketing firm MSL Group London, also showed that own-label accounted for 47% of total grocery sales in the first two months of 2014.

“So significant is the move to​ [own-label] that in some retailers, and in some categories, branded products have disappeared from the shelves completely,”​ Atterby noted.

Challenging ​

Retailers have forced their own-label suppliers to replicate branded products with higher margins during the challenging economic environment in which supermarkets have battled to be the cheapest, he added.

Meanwhile, the economic downturn had seen branded firms investing less in research and development (R&D), which gave own-label producers an opportunity to fill the gap by replicating what was already on the market but at lower prices, said Mallika Basu, director at MSL Group.

Although the UK had emerged from the economic downturn, data showed an increasing number of consumers were still buying own-label products, as they sought better value for money. Consumers were also trading down to own-label as food inflation continued to out-strip their disposable income, she added.

“[Own-label] tends to be the copycat of the brands,”​ said Basu. “Brands lead the way in terms of innovation and then​ [own-label] comes in and copies the products and offers them cheaper.”​

Competitive edge ​

The continuing rise of own-label sales was set to continue, Basu predicted. She said brands would need to invest more in R&D to maintain a competitive edge. This was particularly so when most new products only had a lifespan of two years, she added, and average product lifespan was between four and five years.

Brand innovation needed to offer something new that had not previously been available, said Basu. “It’s not just about doing lots of innovation, it’s about having a good idea and carrying it out well.”​

Brands also needed to engage more with their consumers, said Basu. “Brands have to pay a lot more attention to the stories they are telling. It may not be a case of having to develop a new product, but telling a better story about it,”​ said Basu. This would drive a point of difference for consumers and was something own-label wasn’t particularly as good at, she added.