Consumers Seek Out Private Label

Author: Melanie Perez

Date published: 21 Oct 2008

Euromonitor's latest Strategy Briefing examines how private label brands are offering value in the midst of a global economic slowdown

Attitudes towards private label products are changing as consumers find themselves strapped for cash in the midst of an economic slowdown. Until recently the concept of private label was associated with lower income groups who could not afford to pay for brand name products. According to Euromonitor International's new Strategy Briefings report “Private Label: Potential in a Weakening Economy”, with the global market for private label fast-moving consumer goods valued at almost US$268.4 billion in 2007, private label is more widely accepted by consumers of all types and incomes.

Consumers uncertain about the economy and personal finances seek value for their money in everything they purchase. “The appeal of private label in light of the credit crunch and soaring gas prices is that it offers consumers from middle income groups more for their money. The emergence of PRAV – “proud realiser of added value” – has also helped heighten the segment's appeal,” says Gina Westbrook, Research Manager for Euromonitor International.

Retail concentration has also played a significant role in the rising profile of private label brands in Europe. According to Euromonitor, the top five retailers in Spain, the Netherlands and France hold more than 50% of their market. “Retailers are leveraging their position in the market to push their own brand-orientation and help boost their private label brands. They've been able to penetrate the market by increasing the range of their private label products and offering similar quality, if not premium options, to their branded counterparts,” adds Westbrook.

According to the report, despite the increasing sophistication of private labels, their share of the market is still only largest in highly commoditized sectors such as disposable paper products and certain categories within packaged food and pet food. “The future growth of private label will depend on retailers' ability to be innovative, build on their corporate brands to gain consumer trust and keep prices competitive,” says Westbrook. “Retailers will have to maintain their edge in the industry by exploring areas where there exists untapped potential.”

Private Label Potential in a Weakening Economy