High rates of inflation in many markets are causing the prices of many products to rise steeply. These price increases are leading to renewed interest in private label goods, which have historically been positioned as affordable alternatives to name brand products. This briefing focuses on the growing importance of private label from the perspective of five retailers which have created store brands and integrated them as part of their corporate identities and long-term strategies.
This report comes in PPT.
The global inflationary crisis had made consumers more price sensitive. This had led to renewed interest in private label goods across markets, thanks to retailers' affordable store brand assortments. This has allowed retailers to increase shelf space devoted to store brands to improve profit margins and gain a competitive edge against manufacturers' branded products.
Much of the recent innovation in the private label space has been centred on wellness and sustainability. Retailers are embracing these trends due to increased awareness of climate change, momentum in healthier eating habits that emerged during the pandemic and changes in labelling and regulations in some markets.
Digitalisation gives retailers a unique opportunity to expand the visibility of their store brands beyond the reach of their physical stores. As omnichannel becomes the default model, retailers are increasingly bringing their private label offerings online, including by partnering with on-demand delivery services.
Momentum in private label is encouraging more retailers to venture into new categories such as beauty and personal care products with their store brand assortments. The shift is supported by expansion in consumer-centric approaches highlighting gaps in manufacturers’ name brand offerings, flexibility in innovation and shortened implementation periods.
As the economy improves and consumer confidence increases, retailers are expected to bet on quality - rather than simply offering low prices - to stimulate continued demand for their store brands. The shift will be supported by investments in research and development, with private label maturing to become a catalyst for innovation in its own right.
Retail is the sale of new and used goods to consumers from a business for personal or household consumption from retail outlets, kiosks, market stalls, vending, direct selling and e-commerce. Retail is the aggregation of Retail Offline and Retail E-Commerce. Excludes specialist retailers of motor vehicles, motorcycles, vehicle parts. Also excludes fuel sales, foodservice sales, rental transactions, and wholesale sales (e.g. Cash and Carry). Sales value excluding or including VAT/Sales Tax. Retail also excludes the informal retail sector. Informal retailing is retail trade which is not declared to the tax authorities. Informal retailing encompasses (a) sales generated by unregistered and unlicensed retailers, i.e. retailers operating illegally, and (b) any proportion of sales generated by a registered and licensed retailer that is not declared to the tax authorities. Unregistered and unlicensed retailers operate predominantly (although not exclusively) as street hawkers or operate open market stalls, as these channels are harder for the authorities to monitor than permanent outlets. Activities in the illegal market, which is usually understood to refer to trade in illegal, counterfeit or stolen merchandise, are included within our definition of informal retailing. Activities in the “grey market”, which is usually understood to refer to trade in legal merchandise that is sold through unauthorized channels – for example cigarettes bought legally in another country, legally imported, but sold at lower prices than in authorized channels – will be included as informal retailing if no tax is paid on sale by the retailer. However if the retailer pays tax – for example on cigarettes bought legally in another country but sold at a lower price than standard – the sale is included within formal retail.See All of Our Definitions
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