Business
OWN BRANDS:
INCREASING CONSUMER CHOICE AND
DRIVING INNOVATION
DECEMBER 2010
Introduction
Commerce thrives on fierce competition, with retailers and wholesalers vying for the attention and loyalty of customers. Every day, customers vote with their feet for the stores of their choice. Shops therefore depend on maintaining the reputation of their business and the trust of their customers.
Own brands products, in many cases marketed under the store’s own label, have developed at all levels of value in both food and non-food products in response to consumer demands for value for money: often they are market leaders. They also allow stores to offer something unique to differentiate them from their competitors.
There is currently a lively political debate on own brands which is characterised by a number of misconceptions. With this brochure we aim to shed some light on own brands and provide a clearer picture about what they are. In particular, we would like to give answers to the following questions:
• What are own brand products?
• Why do consumers like own brand products?
• Are own brands a threat to competition or consumer choice and do they hamper innovation?
• Who produces own brands?
2
Increasing consumer choice and driving innovation
What are own brand products?
The term own brands, also known as store brands or private labels, refers to “all merchandise sold under a retailer’s brand. That brand can be the retailer’s own name or a name created exclusively by that retailer.” (Source: PLMA website)
Own brand products are not a new phenomenon. They have been in the market for almost a century. Whereas some retail formats have de veloped almost exclusively as own brand sellers, most retailers sell a mix of both branded and own brand goods.
In the early days, own brands were often perceived as cheap or generic. Over the past 20 years or so, however, they have shown an impressive development. Own brand products have become
INCREASING CONSUMER CHOICE AND
DRIVING INNOVATION
DECEMBER 2010
Introduction
Commerce thrives on fierce competition, with retailers and wholesalers vying for the attention and loyalty of customers. Every day, customers vote with their feet for the stores of their choice. Shops therefore depend on maintaining the reputation of their business and the trust of their customers.
Own brands products, in many cases marketed under the store’s own label, have developed at all levels of value in both food and non-food products in response to consumer demands for value for money: often they are market leaders. They also allow stores to offer something unique to differentiate them from their competitors.
There is currently a lively political debate on own brands which is characterised by a number of misconceptions. With this brochure we aim to shed some light on own brands and provide a clearer picture about what they are. In particular, we would like to give answers to the following questions:
• What are own brand products?
• Why do consumers like own brand products?
• Are own brands a threat to competition or consumer choice and do they hamper innovation?
• Who produces own brands?
2
Increasing consumer choice and driving innovation
What are own brand products?
The term own brands, also known as store brands or private labels, refers to “all merchandise sold under a retailer’s brand. That brand can be the retailer’s own name or a name created exclusively by that retailer.” (Source: PLMA website)
Own brand products are not a new phenomenon. They have been in the market for almost a century. Whereas some retail formats have de veloped almost exclusively as own brand sellers, most retailers sell a mix of both branded and own brand goods.
In the early days, own brands were often perceived as cheap or generic. Over the past 20 years or so, however, they have shown an impressive development. Own brand products have become