Why brands are good for retailers as well
The common view about manufacturer brands and retail own label is that the two are in an almighty fight. And that the more own label products a retailer stocks, the better their business will grow. Right?
This is based on eye-opening results from research done by Europanel, published by the British Brands Group. This survey looked at retail own label in 30 countries, with 60 or more categories per country.
The survey shows that brands actually help drive category growth for retailers. And this is even true for discounters like Lidl. In the 35 categories where the discount chain grew its category share, brands had a 59-65% share of the category. In the 48 categories where Lidl under-performed brands had a share of 22-26%. Interesting eh?
The reasons for these results are that brands are the ones who tend to invest in product, packaging and communication. Best of all are the c. 14% of innovations that drive genuine category growth, as opposed to just stealing share. These shared some common characteristics:
– Really novel, bringing something new to the market
– From brands with strong equity
– Supported by significant marketing effort
Examples of this type of category growing innovation would include Flora/Becel ProActiv, Actimel from Danone, Uncle Ben's Express Rice and innocent smoothies.
The more that brands focus their innovation effort on these types of category growing innovation, the better their chances of getting retailer support.