Private labels are favourite among shoppers: survey

Price is a primary driver of purchase intent among 70 per cent of global respondents, but quality is important, too. Two-thirds (67 per cent) believe private labels offer extremely good value for money. 

In Asia, private label has been available for the last quarter century, but growth has been slow. Value share is highest in Singapore (8.1 per cent), Hong Kong (5.1 per cent), India (4.5 per cent) and Taiwan (3.1 per cent) and lowest in China (1.3 per cent), Thailand (0.8 per cent) and Indonesia (0.6 per cent). 

Asia-Pacific has the highest percentage of respondents (58 per cent) who believe name brands are worth the extra price – 10 per cent higher than the global average, 20 per cent higher than North America and 26 per cent higher than Europe. Nearly six-in-10 respondents in Indonesia (59 per cent), the Philippines (58 per cent) and Thailand (56 per cent) believe they risk wasting money when they try new brands. Instead, shoppers prefer to buy the trusted brand advertised on TV every week, especially now that it is increasingly offered at a discounted price. 

“Asian shoppers are strongly brand loyal, and retailers have not invested enough in private-label marketing programs to persuade shoppers to trust its quality,” said Peter Gale, managing director of retailer services, Nielsen Asia-Pacific and Middle East. “Many Asian retailers have virtually copied and pasted the European model without dedicating the groundwork necessary to build loyalty. Just launching new private-label products is not going to drive significant growth unless retailers address the fundamental issue of shopper demand properly.”

The Nielsen Global Survey of Private Label polled more than 30,000 Internet respondentsi in 60 countries throughout Asia-Pacific, Europe, Latin American, the Middle East, Africa and North America to understand how consumer perceptions about private label quality, value, assortment and packaging translate into sales around the world between February 17 and March 7, 2014. 

While opinions are positive, private label development varies greatly around the world. Store-brand value share is at or above 15 per cent in the developed regions of Europe, North America and the Pacific. In developing regions, it is below 10 per cent in most countries in the study. In fact, private-label share is 5 per cent or less in markets such as China, India and Brazil. There does, however, appear to be a ceiling for growth. Even in the most developed European store-brand markets, private-label share has remained around 45 per cent for the past 10 years. 

“Private label is most developed in Europe, particularly in Western markets where sales account for roughly $1 of every $3 spent in the consumer packaged goods market,” said Jean-Jacques Vandenheede, director of retail industry insight, Nielsen Europe. “Share of basket for even the heaviest private-label buyers hits a tipping point around 50 per cent  because brands have the growth advantage. Commitment to innovation, analytics and marketing are effective strategies for maintaining and growing share. Successful store brands are ones that invest in brand management activities like their manufacturers peers and they build brand equity by providing value, standard and premium offerings for consumers at all price points.”