Consumers turn on home brand

Consumers are turning away from private label products, a new study has found.

Nielsen’s annual Retail and Shopper Trend report, which identifies key trends and market shifts in the grocery sector in Australia, found that in the second quarter this year, private label penetration dropped by 0.7 per cent since the same time last year, with the largest drops being in the biscuit (-4.6 per cent), canned fruit/fruit snacks (-3.9 per cent) and cake/pies & fresh pastries (3.1 per cent) categories.

Kosta Conomos, executive director, Nielsen’s Retail Industry group, said a recent heavy emphasis on branded products by retailers was a key driver in the fall in private label sales.

“There has been a closing of price gaps between branded and private label products recently which is being largely driven by retailer price wars,” said Conomos.

“Shoppers are now seeing zero differentiation between pricing in Coles and Woolworths compared to three years ago when Woolworths was largely given credit for lower prices.”

Nielsen’s latest report shows that shoppers have a heightened awareness of prices.

Less than 50 per cent of shoppers felt confident they knew the prices of the things they bought most often, compared to 60 per cent in 2012.

“Consumers are becoming a lot more promotionally savvy and decreasing the average price per unit, however this doesn’t necessarily mean we’re buying less,” he said.

“Australian’s are getting greater value for money through shrewd shopping behaviour.”

Cross selling between major retailers has also continued to increase, demonstrating a lack of loyalty or differentiation compared to other markets such as the UK.

Nielsen’s trending data showed cross selling between Coles and Woolworths has increased from 87.2 per cent in 2010 to 88.1 per cent this year.

“As retailers continue to focus on the same initiatives such as private label, loyalty reward cards or low shelf prices, shoppers are increasingly seeing them as ‘hygiene factors’,” continued Conomos.

“There is a perceived lack of differentiation between major retailers, which leads consumers to look at the intangible benefits of a brand – what is the value proposition?”

Nielsen’s report shows that retailers need to form an emotional connection with shoppers through ‘wow’ factors which are increasingly driving store choice.

These can include ‘proving an enjoyable experience’ and a ‘pleasant shopping environment’. ‘Staff service’ has also significantly increased in importance for shoppers in the past 12 months.

“We live in a fragmented, multicultural society so retailers should therefore be differentiating themselves through more targeted campaigns to meet shoppers’ specific needs.

Unless further differentiation occurs among Australian retailers, we’ll continue to see very high penetration levels and cross shopping, with low levels of loyalty.”

Comments

Comment Manually

Twitter

Take a peek inside The Holiday Lab, Luxury Escapes' latest pop-up, which aims to cure people's post-vacay blues… https://t.co/y3gmsfcMoT

13 hours ago

Harvey Norman blamed a 4 per cent dip in first-half profit on bushfires and extreme weather #retail #ausbiz https://t.co/sl9CkzYHT9

16 hours ago

Research suggests criminal penalties won't be enough to stamp out corporate wage theft. Here's what else needs to h… https://t.co/HoYna6byVG

4 days ago