Retailer brands are holding their own

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Shoppers regard supermarket own-label products as on a par with and sometimes better than branded equivalents – but not in every category, a study finds

The majority of consumers consider mid-tier own-label products in supermarkets to be of the same quality as brands, while 14 per cent believe they are better, new research shows.

The study by Perception Research Services (PRS), seen exclusively by Marketing Week, suggests shoppers feel increasingly comfortable about buying supermarket own-label items and often prefer them. It reveals that 63 per cent regard ‘regular’ own-label items as the same quality as branded alternatives compared to 23 per cent who feel they are lower quality.

Own labels compared to brands

In addition, the survey of 1,000 UK shoppers finds that 55 per cent consider ‘best/finest’ own-label ranges to be the same as equivalent brands, while 38 per cent see them as better. However, 61 per cent still regard ‘value’ own-label brands as worse than manufacturer brands and only 27 per cent see them as the same.

Elsewhere, the research shows that most people feel either positive or neutral about buying own-label. Nearly half (47 per cent) say they are indifferent while 27 per cent say they feel ‘savvy’ and 19 per cent feel happy about buying them. Only 3 per cent report feeling embarrassed when purchasing retailer-branded products.

How do you feel when you buy own label brands 2

Grant Montague, European vice-president at PRS, believes that the rising popularity of own-label goods is partly a symptom of the recession and people’s desire to find cheaper alternatives to brands. But he also notes that it is part of a longer-term trend whereby retailers have become more sophisticated in how they develop and market their own-label ranges.

“I don’t think that consumers see these products as own-label as such any more – rather they’re seen as brands in their own right,” Montague says. “There are certain sectors where ‘finest’ ranges are seen as a leader above other brands. Retailers are using similar tactics to major brands by ‘premiumising’ their products, such as by making provenance a focal point on the packaging.”

The study also highlights how shoppers at different retailers regard own-label products. People who shop most frequently at discount retailers Aldi and Lidl, for example, are most positive about buying own-label goods, with 68 per cent reporting positive emotions. 

Aldi and Lidl shoppers are also most likely to view ‘value’ own-label products as better quality than manufacturer brands (19 per cent compared to an average of 12 per cent across all retailers).

Meanwhile, regular shoppers at premium food retailers Marks & Spencer and Waitrose are most likely to consider ‘finest/best’ own-label products to be better quality than brand equivalents (45 per cent compared to an average of 38 per cent). A breakdown of attitudes towards specific products shows that 19 per cent of shoppers at M&S and Waitrose see own-label frozen meals as better quality than manufacturer brands – nearly double the overall survey average of 10 per cent.

Supermarkets own label brands inforgraphic

Nathan Ansell, head of food marketing at M&S, argues that the retailer’s focus on its own products provides it with an advantage over the major supermarkets. The majority of M&S’s food ranges are own-label and this allows it to bring new ideas to market more quickly, he says. 

“It means we’re much leaner and more targeted in our offer because we can control the supply chain and the offer within our stores,” he says. “It also allows us to be far more innovative internally.”

The importance of M&S’s food business has grown in recent years as clothing sales have struggled. Last year, like-for-like UK food sales rose 1.7 per cent against a 1.4 per cent fall in general merchandise.

M&S essentials range
M&S says the fact it sells mainly own-brand food means it can be quick to innovate and focus on meeting customers’ needs

The company is continuing to develop its food offer by devoting more attention to its Simply M&S range on everyday essential items, which now accounts for 11 per cent of sales, and by launching seasonal promotions. For example, the current Summer of Flavour campaign covers about 300 different products and is supported by in-store décor and marketing.

“Summer of Flavour offers lots of different flavours and ingredients you’ve never heard of, but it’s also a range of products that covers everything from crisps and sandwiches to things you put on the barbecue,” explains Ansell. “It’s all designed to offer customers new and interesting ways of enjoying food.”

The study by PRS shows that there remain certain product categories in which people are more attached to manufacturers’ brands. More than a third of people (36 per cent) say they only buy branded crisps, for example, while 28 per cent say they only buy branded household cleaning products.

There are differences in quality perception too, with 44 per cent of shoppers stating that own-label alcohol products are inferior to brands versus just 20 per cent who feel the same way about bakery products. But Montague at PRS believes that even in the alcohol sector, consumer attitudes towards own-label are starting to turn.

“Some of the retailers have been quite clever about when to bring their names to the fore on products and when not to,” he says. “In the wine category, for example, you often see labels that say things such as ‘Selected by Sainsbury’s’ or ‘by Tesco’, where there is an impression that there is ownership by some sort of sub-brand that has a regional claim and is not overtly an own-label product.

“That’s an example of the retailers showing awareness of their categories and markets, and positioning their products accordingly.”

Percol cofffee
Brands such as Percol are having to work harder to promote themselves in the face of a growing number of quality own-labels

Niomi Taylor, marketing manager at Food Brands Group, agrees that retailers are becoming more sophisticated in how they develop and market their own-label products. This is a growing challenge for her company, she says, which owns coffee brands Percol and Rocket Fuel.

“It’s difficult because Waitrose, for example, which is obviously a premium brand itself, has a huge offer of ground coffee,” she notes. “As a branded ground coffee, Percol appeals to the knowledgeable coffee consumer by offering lots of different origins and varieties, but now Waitrose can almost match that. It makes it difficult for us.”

Taylor says that it is vital for brands to draw on their heritage and expertise in order to compete with own-labels. Food Brands Group focuses on product quality, packaging and sampling in supermarkets to encourage people to choose its brands over supermarket ones.

“As a brand it’s our responsibility within the category to innovate and try new things,” says Taylor. “That’s how Percol as a brand has managed to stay around in the crowded ground coffee market for a long time.”

Marketers’ response

Nathan Ansell

Nathan Ansell

Head of food, marketing, Marks & Spencer

Being a predominantly own-label business is a major strength for us. It allows us to be far more innovative and to create a lot of excitement for customers in-store. We have a very broad church of customers at M&S – about 20 million people shop with us every week – so our food is less about targeting a specific demographic and much more about customer needs.

Our current Summer of Flavour range, for example, is about the desire among customers to try new things and perhaps show off a little bit if they have people coming round for a barbecue or a summer party. Equally, health is becoming increasingly important to our customers and therefore to us so we’ve been launching lots of healthy lines that will appeal to these people.

Niomi Taylor

Niomi Taylor

Marketing manager, Food Brands Group

Historically, consumers prefer brands to own-label but the gap is closing. That’s a huge challenge for our coffee brand Percol. Waitrose and Sainsbury’s, for example, now have a huge own-label offer of ground coffee and they’re doing a fantastic job, both in terms of product quality and branding.

Over the years we’ve been differentiating ourselves by being experts in the field. We communicate our expertise through our packaging and other communications in order to push through the crowd of own-label.

Sampling is also key for us. Coffee is a product that people really love and our customers are very loyal to us, so we try to get people to try the product as much as possible.

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