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Rising stars Private labels have come a long way from being just plain-wrapped, low-priced options. Thanks to product innovation and better-than-the-leadingbrand quality, they now outsell branded goods in many categories. the world are investing more and more in their own brands. The concept of private labels has changed dramatically over the past five to 10 years, while sales have shot up. At Asda, Britain’s second-largest retailer, private labels now make up a large percentage of total sales of both edible and non-edible products. Len Barker, general manager of nonedible grocery and baby products at Asda, confirms that consumer attitudes toward private labels have changed dramatically. “Private labels used to be seen as a cheap and cheerful option, though not as good as the brand leader,” he says. “Today people expect a private label to have a very good quality base and to be as good as, or better than, the leading brand.” Private labels started out several decades ago as anonymous products at the low end of the price range. But now store brands form an entire brand architecture in their own right, often covering at least three segments of the price range – cheap, standard and premium. They also include specialty lines such as organi- g cally produced goods and eco-labeled or fair-trade-certified products. Uncertainty about the economy makes price a greater concern for shoppers, and private labels in general have become more aggressive, Barker says. “We are entering a period of six to 18 very interesting months,” he says. “The economic climate is getting tougher, and people still have to eat. If things continue to get tougher, they might be more and more inclined to ditch branded products in some low-involvement categories, particularly in such a mature market as the UK.” problems in selling branded goods next to private labels, as its strategy is based entirely on what the consumer wants. “It’s all about giving the consumers the benefit of choice,” Barker says. “They have to be happy with what they’re buying from us. By voting with their feet, they tell us what they want or don’t want.” The relationship between branded products and private labels on Asda shelves varies across categories, Barker says. In some categories, private label penetration is relatively low. “Washing powder, for example, is dominated by a handful of very big multinational brands, so Asda private labels have a slightly different role,” he says. “Because laundry is so heavily advertised and constantly pushed, many customers still hold the idea that private labels are never going to be as good.” In the tissue category, on the other hand, private labels play a bigger role at Asda, whose strategy is to come up with products that are better than the leading brand. One highly successful result is Asda Shades, a private label toilet tissue supplied by <strong>SCA</strong>. “We have got a fairly unique proposition versus most of our competition. “It is one of our few private labels that have outsold the biggest brand by a long way for many years. We refer to Shades as ‘the crown jewel’ among our private labels.” general strategy behind its own brands is to gener-
ate a “very credible option.” Trying to push inferior products under a private label could damage the overall brand, he warns. “We have to make sure that we are not giving anyone any reason to complain about quality in anything that we put our name on,” he says. “We have a reputation to keep, and the entire Asda brand might suffer from poor performance from an Asda-labeled product.” While Asda has been owned by Wal- Mart, America’s No. 1 discount retailer, since 1999, it has a long heritage as a value retailer in Britain, Barker says. The idea, he says, is “great-quality products at great prices, not poorquality products at cheap prices.” In the absence of the massive advertising and promotion employed by global brands, private labels have to use packaging as a means of communicating with the customer, and they must also show more creativity and be faster to market with innovations, Barker says. that as consumers have become savvier, less advertising might even work in favor of customer perception. “I think people have become more aware of the fact that a lot of the price difference between branded goods and private labels is related to advertising,” Barker says. “And we try to do things with our brands that even the leading brand has not done. Asda Shades being first to market with sustainability FSC labeling is one example.” Barker says what he really wants from a private label supplier is that it helps Asda stand out from the crowd by offering a unique point of difference versus the competition. “We need products that are first to market, and the supplier must be able to cover everything, including environmental benefits,” he says. In general, Barker finds relationships with private label suppliers to be different from relations with branded product manufacturers. “They have to be,” he says. “Generally speaking, there is a difference in attitude. With a big branded supplier, their priority is their brand on our shelves and not our customer.” The offerings of branded suppliers might not be ideal for Asda shoppers, whether in terms of pack size, quality, flavor or pricing, he says. What about the future, then – will private labels take over the shelves completely? “If the customer wants it, why not?” Barker concludes.
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