Three key factors—increasingly savvy store brands, an economic environment that’s pushing consumers to reconsider their brand choices, and manufacturer brands decreasing their marketing spend—are combining to form a perfect storm in favor of private labels.
Store brands aren’t new, of course. But in boom times, consumers had fewer compelling reasons to consider alternatives to the brands they’d bonded with over the years, even if they cost significantly more. The current environment, however, is different from anything we’ve seen in our lifetime.
In Japan, a major retailer, Aeon, saw 40 percent growth for its private brand, Top Valu, in February. Across its 2,000 stores, that translated to 371 billion yen (around US$3.8 billion). It’s likely that with better control over production costs and therefore a keener ability to defend its margins, Aeon will add more of its own products into the mix and take up even more shelf space.
Given that private label products can be 30-50 percent cheaper than their branded rivals, it’s more essential than ever for FMCG manufacturer brands to defend the bonds they’ve built with consumers—yet most are slashing their marketing budgets.
0 Response to “‘Private Brand’ perfect storm”