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Have brands been conning consumers?

News, 31 August 2015

LONDON: The rise of discount supermarkets and the success of own-label raises many questions for brands, not least how they can cope with what appears to be a shift in the psyche of UK consumers.

Own-label accounted for 51.3% of UK grocery shopping in 2014, its highest share in a decade according to Kantar data published in Marketing.

And, with fast-growing German discounters Aldi and Lidl selling few recognised brands but often producing close replicas, the pressure on mainstream brands is growing.

"Everyone should be scared of Aldi and Lidl," according to Vhari Russell, founder of the Food Marketing Expert. "They have reduced SKUs so as a shopper you don't have to choose between five tubes of tomato paste. And their branding is very clever and similar [to brands]."

The last point is particularly important, argued retail consultant Kate Jones. "Consumers want brands and getting something that looks very much like the brand at an acceptable quality for a much better price is a no brainer for so many consumers," she stated.

"If Lidl and Aldi can make an almost indistinguishable product, have brands been conning us for years?" she asked.

It's a message that Aldi first started pushing four years ago when it launched a campaign with the strapline "Like brands, only cheaper. That effectively kick-started its rise in the sector where it now (August 2015) claims a 5.6% share.

Rival retailer Lidl has also been ramping up its advertising expenditure to highlight the quality and taste of its own products. Marketing recently reported that its TV spend had risen 408% in the first half of the year and was now greater than any of its rivals, and more than double that of market leader Tesco.

In this atmosphere, brands will have to work harder, with Jones maintaining that those with "honesty, meaning and a story" will fare best.

"The retail market is fast moving," she added, "and although own label may feel like it is getting the upper hand today, brands will and can fight back because no one is more expert at making a brand than the brand owner."

Data sourced from Marketing; additional content by Warc staff