Retailing giant Ahold says it is keen to bring the knowledge it has learned from its home market, the Netherlands, to the US. The company wants to achieve 40 per cent private-label penetration in the country.
Private labels offer many opportunities to retailers and manufacturers – growing the store brand, insight into how changing commodity prices are affecting the market, and an increase in sales and profit margins.
With so many own-label brands now on offer to shoppers, it is becoming increasingly difficult to tell one private-label brand from another; this creates the perfect scenario to attract new business and grow sales with existing customers.
Supermarkets can achieve higher gross margins from private label with these believed to be as high as 40 per cent. The retailing group Ahold has strong private-label brands in Europe and the United States.
The company says that its Dutch banner Albert Heijn now has over 50 per cent penetration of private label produce. Speaking to European Supermarket magazine recently, Ahold’s Jochem van de Laarschot said that the group’s Dutch banner Albert Heijn had over 50 per cent penetration of private label produce. “There is continued growth in this area, and it has gone up massively in the last ten years.
He says that private-label levels are lower in the US because “national brands play, historically, a greater role”. People like their Coca-Cola etc., he explained. The US market represents 60 per cent of overall sales for the group with four regional pisions – Stop & Shop New England, Stop & Shop New York Metro, Giant Landover and Giant Carlisle. Ahold operates more than 750 supermarkets in 14 states. Should the company achieve its US target of 40 per cent own-label penetration, it would mean incredible growth with the country accounting for 60 per cent of its global sales.
Meanwhile, US private-label lines are expected to achieve penetration on par with the European market during the next decade, according to Rabobank’s Food and Agribusiness Research Group. The market share will grow from less than 20 per cent in the US to 25-30 per cent, said Rabobank. Having grown by six per cent over the past five years, the financial institution believes this private-label growth is due to innovation and investment in brand management by retailers, consumers’ understanding of value, and retail consolidation having increased own-brand penetration and power.
With so much opportunity for growth in the own-brand sector, it makes sense for retailers and manufactures to carry out competitior price monitoring on private-label lines and use the retail price intelligence in marketing strategies and pricing decisions. (15 Oct)
© Profitero 2012
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Pricing intelligence company Profitero provides retailers with actionable price intelligence data, monitoring over 50 million products across 4,000 eCommerce retailers every day, observing pricing, promotions and stock availability. We work with the world’s leading retailers, enabling them to acquire new customers and grow profit margins by monitoring and responding to changes in competitor pricing and promotional activity as they happen. For more information on Profitero price intelligence and competitor monitoring, visit www.profitero.com or email sales@profitero.com
