PRIVATE LABEL IN EUROPE

Transcription

1 PRIVATE LABEL IN EUROPE

2 AGENDA PL growth drivers & brakes Beyond the three-tier model Reinventing the mainstream Licensed to thrill licensing & PL differentiation The private label prognosis 2

3 PL GROWTH DRIVERS & BRAKES

4 GROWTH DRIVERS OF PL DEMAND Greater demands for value for money from shoppers (30% of European shoppers state they intend to purchase more PL) 4

5 GROWTH DRIVERS OF PL DEMAND Recession-hit low income shoppers have needs unmet by national brands 5

6 GROWTH DRIVERS OF PL DEMAND Affordable indulgence has seen trading up to premium 6

7 GROWTH DRIVERS OF PL DEMAND Some shoppers still happy to pay a premium for Fair Trade/organic 7

8 GROWTH DRIVERS OF PL DEMAND Improving quality perceptions 8

9 GROWTH DRIVERS OF PL DEMAND Higher levels of innovation & niche PL development 9

10 GROWTH DRIVERS OF PL DEMAND More aggressive marketing (instore and out of store) of PL ranges by retailers 10

11 GROWTH DRIVERS OF PL DEMAND More aggressive marketing (instore and out of store) of PL ranges by retailers 11

12 GROWTH DRIVERS OF PL DEMAND More aggressive marketing (instore and out of store) of PL ranges by retailers 12

13 GROWTH DRIVERS OF PL DEMAND More aggressive marketing (instore and out of store) of PL ranges by retailers 13

14 GROWTH DRIVERS OF PL SUPPLY Retailers accessing (international) growth through supplying other retailers 14

15 GROWTH DRIVERS OF PL SUPPLY Retailer as brand gaining traction 15

16 GROWTH DRIVERS OF PL SUPPLY Retailer as brand gaining traction 16

17 RETAILERS THE BRANDS OF THE FUTURE 17

18 GROWTH DRIVERS OF PL SUPPLY Discounter growth & supermarkets reaction to it 18

19 GROWTH DRIVERS OF PL SUPPLY Margin advantage for retailers 30% cost saving compared to brands 10% from lower supplier costs (packaging, advertising, specifications, economies) 20% from lower supplier margin Source: UK Competition Commission; Kantar Retail 19

20 GROWTH DRIVERS OF PL SUPPLY Lower margins for PL suppliers Note: Operating margins (%); Source: Kantar Retail 20

21 GROWTH DRIVERS OF PL SUPPLY Margin advantage for retailers 20% retained as higher margin for retailer 10% passed onto shopper in the form of lower prices Source: UK Competition Commission; Kantar Retail 21

22 GROWTH DRIVERS OF PL SUPPLY Carrefour has been using PL to clarify & declutter its assortment - Reducing SKUs (-15%) - Expanding Customer Needs Units (+5%) - Broadening Carrefour-branded offer Before: Choice = SKUs Private brands = copycat PL = 35% of volume After: Choice = CNUs Private brands = covering new CNUs Carrefour PL = 50% of volume Copyright 2010 Kantar Retail 1

23 GROWTH DRIVERS OF PL SUPPLY Specific range & leader brands Core market Discount range Copyright 2010 Kantar Retail 1

24 GROWTH DRIVERS OF PL SUPPLY Carrefour aiming for 1 billion savings by 2012 Copyright 2010 Kantar Retail 2

25 GROWTH DRIVERS OF PL SUPPLY 25

26 GROWTH DRIVERS OF PL SUPPLY 26

27 GROWTH DRIVERS OF PL SUPPLY Evolution of buying groups with PL development as a key objective 27

28 GROWTH DRIVERS OF PL SUPPLY Internationalisation of retailing spurs PL growth in emerging economies 28

29 GROWTH DRIVERS OF PL SUPPLY Differentiation Migros - around 90% of grocery range is private brand, of which around 30% is manufactured in-house Development of M Classic, M Budget & Migros Sélection to round out assortment of established house brands Strong growth seen in organic & ethical lines in 2010 against the backdrop of flat sales and heavy price cuts 29

30 GROWTH DRIVERS OF PL SUPPLY 30

31 GROWTH DRIVERS OF PL SUPPLY 31

32 GROWTH DRIVERS OF PL SUPPLY 32

33 GROWTH DRIVERS OF PL SUPPLY 33

34 ECONOMY IS A BRAKE ON PL GROWTH Stronger/more frequent promotions on brands erode PL s price advantage (e.g. 40% of groceries on promotion in UK) 34

35 ECONOMY IS A BRAKE ON PL GROWTH Launch of economy/opp brands by manufacturers e.g. P&G launch of Ariel Básico and Pampers Simply Dry now aiming to have value versions in 75% of categories by

36 ECONOMY IS A BRAKE ON PL GROWTH Launch of lower-value self-cannibalizing PL by retailers 36

37 ECONOMY IS A BRAKE ON PL GROWTH PL more vulnerable to commodity price inflation For us, the product cost in total is about 30% of our turnover. For many of the retailers catering to the lower parts of the economic spectrum with their private levels, it can be as high as 70%. So, when there is input cost inflation, I think they will see more of that coming through than we do... 37

38 BEYOND THE THREE-TIER MODEL

39 DEVIATION FROM CLASSIC THREE TIER MODEL Price PREMIUM STANDARD VALUE Quality Copyright 2010 Kantar Retail 11

40 DEVIATION FROM CLASSIC THREE TIER MODEL Price SUPER PREMIUM HEALTHY PREMIUM PHANTOM BRANDS STANDARD ECO/ ORGANIC KIDS DISCOUNT BRANDS VALUE Quality Copyright 2010 Kantar Retail 12

41 BEYOND THE THREE-TIER MODEL Price (p/100ml) Quality Copyright 2010 Kantar Retail 13

42 BEYOND THE THREE-TIER MODEL Tesco s new strategy unveiled in May 2011: To grow the UK core To be an outstanding international retailer in stores and online To be as strong in everything we sell as we are in food To grow retail services in all our markets To put our responsibilities to the communities we serve at the heart of what we do To be a creator of highly valued brands To build our team so that we can create more value 42

43 BEYOND THE THREE-TIER MODEL Tesco aims to develop new brands for shoppers who do not necessarily want to have the name of a supermarket emblazoned across the products they buy: As people develop their higher levels of disposable income, they want to treat themselves. They do not want to just buy Tesco Value shower gel. They want to have something sat in their bathroom that looks like it is a brand. So you create brands. 43

44 BEYOND THE THREE-TIER MODEL 44

45 BEYOND THE THREE-TIER MODEL Delhaize the soon-to-be owner of Piccadilly in Bulgaria has made great progress in recent years in growing its PL share More value for money is a trend that we believe is here to stay; it will not disappear as we recover from the crisis. With our stronger focus on everyday low prices, we convince people that they get more value for money. Our investments in private brand should be seen in that perspective. 45

46 BEYOND THE THREE-TIER MODEL 50% of the basket consists of private label in Belgium; development of six pillar brands: standard, premium, eco, economy, health & beauty, organic 46

47 BEYOND THE THREE-TIER MODEL 365 has become Delhaize s pan-european economy brand 47

48 BEYOND THE THREE-TIER MODEL Delhaize Bio is now one of Europe s largest organics brands 48

49 REINVENTING THE MAINSTREAM

50 REINVENTING THE MAINSTREAM Many retailers have been investing heavily in premium & economy ranges has standard PL been neglected? 50

51 REINVENTING THE MAINSTREAM Asda relaunch of standard PL as Chosen by You in late ,000 consumers involved in 325,000 taste tests Initial launch of 3,000 edible SKUs now up to 6,500 51

52 REINVENTING THE MAINSTREAM Benefits for Asda: Fantastic comps; increased participation in sales & category share. Sales up by between 6% & 80% Provision of insight into changing consumer tastes & preferences Has unleashed innovation among PL suppliers Creation of a game-changer that it is impossible to replicate Other WMT units (e.g. Canada) interested in exporting the process & philosophy 52

53 LICENSED TO THRILL

54 LICENSED TO THRILL Système U & WBCP: 200-strong range aimed purely at children Most comprehensive food DTR deal in central Europe and has differentiated Systéme U from other retail chains - and even national brands PL now represents 32.5% of sales (target = 40%) & 42.6% of volume WBCP deal has resulted in gain of extra 1% in market share WBCP is researching whether it can replicate the arrangement in different territories with retailers similar to Système U Copyright 2010 Kantar Retail 26

55 LICENSED TO THRILL "We found that when a child connects with a Disney character, they are much more likely to try new and healthier foods. Disney Bringing magic to mealtimes, Tesco Disney Kids is a fun & nutritious range that encourages healthier eating Tesco Copyright 2010 Kantar Retail 27

56 LICENSED TO THRILL Disney Price per KG: Standard price per KG: 5.89 Copyright 2010 Kantar Retail 28

57 THE PRIVATE LABEL PROGNOSIS

58 THE PRIVATE LABEL PROGNOSIS Private label growth, despite a slowdown, will continue across most markets. Fastest growth in South & East Basic rationale (broad appeal, lower prices, higher margin etc) will remain But the key drivers for many retailers becoming differentiation and engagement While much activity is at the economy & premium ends of the market watch out for mainstream reinvention 58

59 Contact: Twitter: BryanRoberts72