Europe turns to private label goods

12 December 2011

LONDON: Financially-squeezed European shoppers are increasingly avoiding branded goods and purchasing private label alternatives instead, according to a report.

SymphonyIRI, a research firm, said that the market share of private label, in terms of overall sales value, now stands at around 30% of all goods sold by retailers across Europe.

The Retail Private Label Brands in Europe report added that the value of private label sales has increased from 2010 in four of the six European nations measured by the firm. A basket of these goods costs on average 30% less than a basket of branded goods.

Britain is the sole nation to experience a decline, with private label's value share falling 0.1pp. But this is partially explained by the fact that the UK is a highly developed market for private label.

Collectively, the goods take an overall value share of 49.2%, the highest of the European nations measured by SymphonyIRI.

Meanwhile, French private label sales were flat from a year before, staying at 31%. This is due to "national brand manufacturers stepping up their marketing activities while private label promotional activities decreased," the report added.

SymphonyIRI cited the ongoing economic instability in Europe, which has led to volatile labour market conditions and sluggish lending from banks, as a major factor behind the trend.

Rod Street, the firm's vice president of international consulting, said: "European shoppers are becoming much more inclined to assess the quality and value of the products that they buy.

"With rising unemployment and a major economic crisis in Europe, it's understandable that the consumer will want to budget for the overall price of their weekly shop and secure maximum value for money."

This view was borne out by the fact that Spain, one of the European nations hardest hist by the crisis, experienced the sharpest increase in private label's popularity. Value share there rose 1.2pp to 40.4%.

Meanwhile, Italy had the least-developed private label sector, with value share reaching 16.1%. This was a 0.7pp increase from 2010.

Data sourced from SymphonyIRI; additional content by Warc staff