Coles and Woolworths have recently launched new ‘private label’ (aka house brand) ranges, and announced plans to increase the number of these lines in stores. Judging by the experience of retailers overseas, it’s a smart move. Private labels increase profits for the supermarkets. They also provide retailer identity — the consistent product labelling a constant reminder of where you buy your groceries.
But for shoppers, supermarkets as we know them may never be quite the same again. You’ll probably find that with these changes will come some savings, but commentators predict that some of your favourite, smaller brands may also be swept from the shelves to make way for private label products. If you shop at Coles or Woolworths, chances are you’ve already noticed some changes.
Coles has announced that it hopes to increase its private label market share to 30–40% by 2007. Its goal is to replace its current SAVINGS, FARMLAND, COLES, RELIANCE and PERSONA brands with around 3000 lines under its new brands, which are in three tiers:
- COLES SMART BUY (budget, pictured above right): “Never beaten on price; matches the best quality for the price; choice covers the basic weekly needs of a family.”
- YOU’LL LOVE COLES (mid-range, pictured right): “Cheaper than the leading brand(s); equal to or better than the quality of the leading brand; choice across all major categories.”
- GEORGE J COLES (the yet to be launched premium label): “Cheaper than the equivalent brand; best in class; ‘leading edge’ with innovation.”
Woolworths is retaining its budget HOME BRAND label (along with its WOOLWORTHS FRESH, ORGANICS and NAYTURA labels), but it plans to introduce an additional 200 lines under its new premium brand, WOOLWORTHS SELECT, pitched as being of highest quality, equivalent to if not better than the current market leader.
Woolworths' earlier private label brands, including ARK, BOWMAN’S and MARKETTA, launched as a direct response to the arrival of ALDI in Australia, are being phased out.
The types of products
Until now, product categories with the highest private label share were mostly low-price, high-volume staples, such as sugar, birdseed, butter, vegetable oil (excluding olive), fresh milk, flour, paper napkins, cotton wool and chilled cream. With these fairly basic types of products, trust in the brand isn’t a major consideration for shoppers (see What consumers think for more).
But as we become more and more accepting of private label brands, we’re likely to see more products in the health and beauty and specialist food and beverage categories, where branding is important to shoppers. YOU’LL LOVE COLES shampoos, conditioners and beauty soap are just some examples.