Australian supermarkets strengthen private label push

Posted by Daniel Palmer on 21st May 2009

Australia’s largest supermarket chains are enhancing their focus on private label within their advertising campaigns as they seek to capitalise on an Australian consumer intent on cutting costs.

A push by Aldi to compare their products to the competition following the ACCC’s Grocery Price Inquiry was just the start of the trend, with Australia’s two largest supermarket chains since following up with their own focus on generic brands.

Aldi, whose stores are flooded with private label goods, realised last year that, with a deteriorating economy and positive comments from the ACCC, they had the perfect opportunity to make their mark in the Australian marketplace. With continued promotion via the Grocery Choice website, most of their advertising is written for them.

Coles, on the other hand, has decided to take a more subtle approach with their ‘Feed Your Family for Under $10’ campaign. At first glance the successful promotion appears to be simply about low prices and offering an easy, cost effective solution for the family dinner. But take a closer look and you will discover that the recipe ideas found in-store and in their weekly catalogue are largely based on the acquisition of private label products.

And now Woolworths has launched a campaign highlighting the low cost of their cheapest private label – Home Brand. Press and TV advertisements place the spotlight on three Home Brand foodstuffs – Cheddar Cheese, Strawberry Jam and Self-Raising Flour. Their strategy is to turn around the perception that their products are inferior to national brands by implying that the price difference is purely based on “fancy packaging”. A simple notion but one that is likely to prove very effective.

The campaign centres on their low cost in comparison to alternative brands and leveraging of their brand value: ‘a brand you can trust’ – the ads proclaim. Going a step further, they are also trying to make people feel better about purchasing Home Brand products with the tagline: “Take it home with pride”. Australia’s leading supermarket chain hopes to rid the products of the ‘cheap’ stigma and instead turn it into one of ‘value’.

Private label growth

Coles, Woolworths and IGA have all said that private label sales growth is outpacing that of branded goods. Coles reports double-digit growth, IGA, 12% for their Black & Gold goods and Woolworths – like Coles – remains coy but has indicated double-digit growth.

Coles and Woolworths have both flagged plans for further growth of their private label range, while around 95% of Aldi’s stock is already private label. Not to be left behind, IGA is likely to increase the number of SKUs (Stock Keeping Units) of Black & Gold by almost ten per cent in the year ahead.

And, given the focus by retailers on private label, it is no surprise that such goods have been outperforming national brands for the bulk of the 21st century, with private label now commanding a share of almost 23 per cent. Analysts expect this to grow to 30 per cent in the years ahead.

National brand response

The question for national brand owners is whether to respond. Is it better to acknowledge the private label goods or just ignore them? Will we, for example, see Unilever bring their cheeky “Are we going to compare?” campaign* down under? Will the growth of private label drive consolidation in the sector or simply spur innovation?

Either way, the battle for supermarket shelf space is about to get even fiercer.

* Last year Unilever took the challenge to private label with a number of campaigns in Europe including the “Are we going to compare?” campaign in the Netherlands which pointed out the differences between their Calve brand of peanut butter and that of a leading retailer’s own brand.
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