The rise of the mega-own-brand

The Christmas figures are in, and it’s not a pretty sight when you’re a retailer. Except for Tesco and Selfridges, most retailers in the UK had their worst Christmas in a decade.

Yet, this does not mean retail is dead. The growth of own label has been a veritable phenomenon. Once a low brow, copycat operation in the 1970s and 1980s, it has become a multi-layered offering for almost every major retailer. Just because it is familiar doesn’t mean it has reached its full potential, however. There is still more that can be done, so long as any further development is imbued with purpose and meaning.

Own label across Europe is increasing its share and outperforming brands in most European markets. According to the IRi report from last October, own label shows over 4% growth year on year, whilst its share in value reached 39.4% across major Western markets (UK, France, Germany, Greece, Italy, Spain, Netherlands).

With consumers now happy to buy own label in most categories and fast-growing Lidl and Aldi completely own label, the question is what the future holds for many once loved but sometimes unexciting brands. Why buy Bird’s Eye over Tesco’s frozen fish?

Consolidation across the nation

Own label will peak some time – possibly sometime soon. Yet there is a change in the retail landscape that offers one more big win, and that’s through consolidation. In the UK, for instance, Sainsbury’s and Argos share products, whilst they are also planning to hook up with ASDA. Elsewhere, Carrefour, one of the largest retailer in the world, now owns chains across the globe. Belgium’s Delhaize has joined forces with The Netherlands’ Ahold; both have interests across Europe and the USA and make up an own brand market worth €21M.

Consolidation also affects own label. Value brand Euroshopper, for example, was available in Esselunga (Italy), Ahold (The Netherlands, Belgium and Germany) and Morrisons (UK), but is slowly being phased out. In the US, meanwhile, own label SE Grocers is available in Southeastern Grocers’ four-strong portfolio of branded stores.

From own label to own brand

All these retail mergers are primarily about simplicity and cost reduction, of course. Yet they also offer a chance to build hugely powerful worldwide own label brands. If retailers could navigate through cultural differences they could create larger, own brands across multiple store brands and markets.

Currently almost none of the own label seem to mean as much to consumers as they could do. But with consumer-led strategic thinking, building a purpose for these mega-own brands, they could grow further at the expense of laggard global brand owners.

Own brands for a better planet

Another great opportunity from creating expansive own brands on this scale is the positive inroads that could be achieved tackling over-packaging. Since retailers don’t own factories, they could blaze a trail by demanding their suppliers completely rethink their use of plastics and the disposal of packaging waste as increasingly powerful global brands make sustainability the centrepiece of their activities.

Already, Kingfisher – the owner of DIY stores across ten countries under the B&Q, ScrewFix, Castorama, Brico Depot and Koçta? brands – is moving towards ‘One Kingfisher’. Many of their own brand products on sale will be sold under the GoodHome brand, which directly reflects Kingfisher’s commitment to sustainability.

This could be the dawning of another retail revolution: the arrival of the mega-own-brand.

 

Author: Wybe Magermans – Managing Director

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