John McGee: Brands on the run with big rise of stores' own labels
As the recent batch of Kantar Worldpanel figures for the Irish grocery market show, the battle for the hearts, minds and wallets of Irish consumers is anything but dull as the three main retailers, SuperValu, Dunnes Stores and Tesco, endlessly slog it out for pole position as the country's biggest retailer.
While the latest figures show SuperValu regained its crown as the top retailer - at the expense of a resurgent Dunnes Stores - they also point to an equally-compelling battle that is being waged in the supermarket aisles as so-called national brands slug it out with private label brands for a space in our shopping trolleys.
According to the Kantar Worldpanel figures, private or own label sales now account for 54pc of the total grocery spend, a 6pc increase on the comparable figure in 2013.
Going back even further to 2009, at the height of the recession, private label sales accounted for around 38pc of total grocery spend. In the space of just eight years, that's a big jump.
Historically, private label sales tended to fluctuate in most developed retail markets depending on the prevailing economic climate.
When times were tough, people cut back and switched some of their spend to cheaper private label goods. And when the good times started to roll again, and when they had a bit more cash to splash, they reverted back to their better-known national brands.
Or so the theory used to go.
If 54pc of all grocery spend is now on private label - and this is still behind other European markets like Germany, the UK and France - this represents a sea-change in behaviour by Irish consumers over the past seven years. If other markets are anything to go by, this is a trend which is very unlikely to be reversed.
As a nation, it would appear that we are so over feeling discombobulated by having to buy our toilet rolls and breakfast cereals in Aldi or feeling a tad bashful for buying our duck breasts and coffee capsules in Lidl. In fact, we should be grateful for these German discounters for stirring up the competition and for giving us greater value and choice.
Private label, of course, is nothing to be sneered at. Once the poor and often stigmatised relation of the better-known big brands, it has effectively been reinvented with remarkable success by retailers the world over.
So successful has this reinvention been that some of the larger retailers even have three different price points for their private-label offerings across a number of categories including a value range and a premium range.
But increasingly retailers are now being defined by the quality of their own private label offerings and for many of them, the big growth lies at the premium end of the market. Tesco's Finest and SuperValu's Signature Tastes spring to mind as good examples.
As well as innovating at the product level, retailers have also developed clear brand strategies to differentiate their private-label offering from the bigger brands and, more importantly, can leverage their control of shelf-space and pricing to drive profile and - ultimately - sales at the expense of the national brands.
But the rise of private label and the accompanying change in the consumer mindset has wider implications for large and small food manufacturers the world over. While retailers become increasingly powerful, the big established multinational companies, already under pressure from shareholders because of sluggish or negligible growth, are finding it difficult to grow as newer parvenu brands and producers challenge the established hegemony.
And, of course, the growth in private label sales has only heaped more problems on them by eroding their market share. Likewise, smaller manufacturers can find it tricky navigating the aisles of supermarkets looking for shelf-space for their own brands.
Unless they can find a niche or become a private label manufacturer of scale in their own right, there is a genuine fear that they may not be able to go it alone.
And this is worrying for a country that is trying to develop its own indigenous manufacturing base, particularly within the food sector.
The rise of private label, however, should not sound the death-knell for national brands. Far from it. The reality is that retailers still need them on their shelves. Apart from providing a quality benchmark within a particular category, they also provide a price anchor which often correlates to the price of the private label version and this can have an impact on the retailer's margin.
More importantly, retailers know that customers still want a choice when it comes to buying certain products.
Retailers also know that big brands also invest heavily in innovation and marketing and are good at driving in-store price promotions which in turn can drive footfall. And that's good for business.
But its still all to play for in the retail world and, to paraphrase Charles Darwin, it's not necessarily the strongest or the smartest that survive but those retailers and brands that are responsive to change. And, as we know, change is the only constant in retailing.
Sunday Indo Business