Australian shoppers encouraged to trade down

17 March 2010

SYDNEY: Shoppers in Australia who switch to own-label products when buying certain consumer staples could save hundreds of dollars without incurring a significant loss of quality, a new study had argued.

The research, produced by the country's Treasury, was based on a comparison of the prices of store brands and premium goods in 22 categories like milk, cream, butter, sugar, frozen peas and bleach.

Overall, the "home brand basket" at Woolworths, one of Australia's biggest grocery chains, came in at a value of A$31.11 ($28.47; €20.79; £18.92), with the "brand name basket" on A$61.44.

A similar experiment conducted at Coles, another supermarket group, essentially "reflected" these results, as there was a 50% difference between the bills for "generic and brand-name items".

It was estimated that the potential savings for a couple with three children could reach A$450 a year, a figure that stood at $275 for a couple with one child.

"This is not about buying inferior products because they are cheaper. This is about buying the cheapest item when it is identical to its brand-name competitor," Craig Emerson, the consumer affairs minister, said.

"Shoppers can make big savings at no effort. They don't have to change stores or go hunting for bargains, because the bargains are right there in front of them. It is simply a matter of shopping smarter."

However, Emerson continued that this situation will not apply in certain sectors, especially where products offer distinct functional advantages.

"I'm not talking about grocery items where there may be quality differences between the generic and the branded product, like breakfast cereals, laundry detergents, jams and cheeses," he said.

Woolworths stated that its own-label sales are expanding by around 8% at present, compared with an uptick of 4% for branded goods, with Coles also reporting faster growth for its store brand range.

Commenting on the Treasury's study, Kate Carnell, ceo of the Australian Food and Grocery Council, said that as far as items like butter are concerned, there is a discernible variability in the goods available.

Moreover, she suggested that as retailers set the prices of products on their shelves, they can generate a significant advantage for own-label offerings.

"Manufacturers of products don't set the price in supermarkets. Supermarkets set the price," Carnell said.

Data sourced from Herald Sun; additional content by Warc staff