Supermarkets Become Innovative But More Restrictive
Last month Nielsen research found that supermarket home brands had increased 22.1% in grocery share. This reflects an international trend with the sales of home brand products rising by 30% in the UK. There are a number of reasons for this including the increased difficulty for new brands to get into the major supermarkets, consumers trialing lower cost products in tougher economic times (aka The Aldi effect) and an increased social acceptance of home brands. But the major trend that I see developing is the investment of retailers into the research and development of the home brand.
There have been three major steps in the evolution of the supermarket home brand:
1. Cheap and lifeless
Labels such as Black & Gold and No Frills started the home brand label trend. These offered consumers simple products with simple packaging for a fraction of the cost. These products were considered no major threat to the branded items and were not aggressively marketed. They simply existed as a low cost alternative. I still remember the tinge of disappointment when mum bought the fake tiny teddies instead of the real ones. They were a great way for families to stretch their budgets to include luxury goods which they would not normally purchase.
2. Branded and accepted
Over the last six or seven years we have seen the home brands develop to a level that is competitive with branded items. Even the home brands became brands – Woolworths developed Select and Coles had You’ll Love Coles range (among 7 other Coles home brand labels). We started seeing extensive R&D and promotion – all designed to create products as close to the preferred branded items as possible with atractive packaging and improved quality. These brands were often heavily promoted in catalogue advertising to create a stronger differentiation between Coles and Woolworths. They were only slightly cheaper than the branded items but of a very similar quality. Home brands were considered a comfortable replacement and became socially acceptable to the point that they developed brand advocates.
3. Innovative and pioneering
Take for example, Woolworths Select new Light Potato Chips (less than 10% fat). No one else is offering potato chips with fat content this low. Woolworths are promoting these chips with a heavy weighting of television commercials and giving them premium shelf positioning. From a quick online troll they seem to be passing the taste test with consumers as well.
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This was pioneered in the UK. Home brands had to be as good as regular brands. Here in Oz they were always a cheap alternative. Now they’re a quality alternative. Soon there may be no alternative.
Stan Lee pipped me at the post – I was just going to say, the idea is nothing new in Europe, the UK and the USA. Australian supermarkets were too scared to bite the hand that fed them in the past; they didn’t want to compete with the other FMCG brands because they couldn’t. Now that they can establish their own supply chains, import directly from a wider choice of manufacturers overseas, and establish relationships with Australian producers, they have nothing to lose. It’ll be interesting to see how the big brands compete. I’m tipping research and niche marketing will grow exponentially. Not to mention the re-surgence of suburban markets as people opt to get back to their roots and buy their food from real people instead of faceless corporations.
The thing I am still waiting to see here is Australia (which is seen in the UK) is real integration of own brand products into decent ready or semi-ready meals.
If they get that right then they would make more money, busy people would buy them and they could use their own ingredients into the production. This not only applies to dinner but also the lunch crowd. Tescos et al stock a great range of healthy, ready to go sandwiches and great prices.
Re: waiting to see packed lunches. As much as i can see the genius behind this idea, not having them isn’t such a bad idea. Pre-prepared meals mean people a) become lazy and b) forget the basic necessities of life; like cooking.
A home cooked meal trumps pre-packaged any day.
@j-phull I agree, it breads laziness and I myself love preparing a meal on a Sunday arvo/evening a with a few drinks.
However, the reality is that a lot of people have gone the other way. With the cost of food etc they are turning more and more to junk food.
Pre-packaged, healthy meals, while not as good as home cooking, is certainly better than fast food.
@Stan & Matt – thanks for the OS background. Maybe I'm giving the Australian supermarkets too much credit for being innovative?
@j-phull & Daniel – I'm leaning towards Daniel here. It would be a good alternative to the frozen meals/fast food and be available at a time when people don't want to think (who wants to hang around a supermarket after work). On the other side, we don't want Jamie Oliver coming to Australia because no one can cook a home meal. I don't think it is the aversion to cooking which is the problem. I think we need to make the shopping experience more enjoyable and inspirational so that it is not a chore.
you know that home brands have more preservatives, more chemicals and less nutrients than there more expensive counterparts?
I did my own analysis a couple of weeks ago and was quite shocked.
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Nathan Bush
Digital Strategist at DP Dialogue
Brisbane, Australia
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