SINGAPORE: Consumer perception of retailers' private label products is improving across Asia according to a new report, but this positive sentiment has yet to translate into an uplift in sales.
For its 2014 Global Private Label Report, market researcher Nielsen polled more than 30,000 consumers in 60 countries, exploring their views on private label quality, value, assortment and packaging.
But even though private label products have been available in the region for some 25 years they have yet to make any significant inroads into sales. Value share is highest in Singapore at 8.1%, around half the global average of 16.5%.
The figures for Hong Kong (5.1%), India (4.5%) and Taiwan (3.1%) are low but they are further advanced in this regard than China (1.3%), Thailand (0.8%) and Indonesia (0.6%).
"Asian shoppers are strongly brand loyal, and retailers have not invested enough in private-label marketing programs to persuade shoppers to trust its quality," said Peter Gale, managing director of retailer services, Nielsen Asia-Pacific and Middle East.
"Many Asian retailers have virtually copied and pasted the European model without dedicating the groundwork necessary to build loyalty," he added. "Just launching new private-label products is not going to drive significant growth unless retailers address the fundamental issue of shopper demand properly."
The difficulties for retailers are evident in the finding that Asia-Pacific had the highest percentage of respondents (58%) who believed name brands are worth the extra price – 10% higher than the global average, 20% higher than North America and 26% higher than Europe.
Nearly six in 10 respondents in Indonesia (59%), the Philippines (58%) and Thailand (56%) believed they risked wasting money by trying new brands and instead they preferred to buy the trusted brand advertised on TV every week, especially now that it is increasingly offered at a discounted price.
But Gale also noted that Asian consumers were slowly "building a repertoire of private label products that they like and will buy again, even at a more expensive price than a branded alternative".
There was, he suggested, an opportunity to tailor private label ranges to local tastes and drive trial and build loyalty over time.
Data sourced from PR Newswire, Marketing Interactive; additional content by Warc staff