With retailers investing heavily in own label, the fight for sales is as fierce as ever. However, shifts in how shoppers buy groceries presents opportunities for brand owners to connect with consumers but, writes SymphonyIRI's Rod Street, they must act now. 

As everyone competes for shoppers' loyalty, the continued innovation and investment by retailers in their own product ranges should start to impact the price gap that has always existed between private label and national brands.

The SymphonyIRI barometer for just-food.com highlights the pricing and promotional strategies being adopted by brands and retailers by monitoring a selected basket of core items. The just-food international basket for the third quarter shows the price gap that exists between retailers' private labels and the more expensive national brands has reduced in many countries as the battle for share in a tight market continues to be fierce.

Ownership of the shelf enables retailers to charge less than the national brands that must exact a premium for their investment in communication and branding. However, retailers are not immune to the cost increases afflicting all food brands. As they continue to invest in their own brands' range and quality, their costs increase and the opportunity to close the gap with brands is bigger.

At the same time, national brands are trying to maintain position and absorb the cost increases they face. Their shoppers remain under pressure to afford their groceries in the face of income stagnation and rising household costs and so they must keep prices down.

These factors help squeeze the price gap for the shopper. This dynamic can be seen in five of the eight countries covered by the barometer, perhaps most noticeably in southern Europe where jumps of two to five percentage points can be seen. However it is not universal and countries like Germany, where the low cost discount channel is a major feature, continue to maintain private label prices that are about half that of brands, reflecting this different trade structure. The channel structure shapes shopper behaviour and brand opportunity.

So much is not new, yet the intense pressures facing national brands on communication and branding are increasing with channel change. The growth of convenience stores squeezes shelf space. The move online increases price transparency.

To succeed, brands need to maintain their share of mind with shoppers.

Necessity is as always the mother of invention. As shoppers move increasingly multi-channel, brands are able to use new ways to achieve salience and are starting to invest in this. Earlier this month, for example, Kellogg piloted a 'virtual store' linked to the websites of the UK's main supermarkets for one of its pillar brands, Special K.

Designed to link online activity and profile directly with shopping, the Special K snack store provides a readily accessible hub with a rich array of product information directly linked to details about availability, price and promotions in-store.

Whilst this might just be a toe in the water for Kellogg, what we are seeing is a massive new opportunity to build connections with consumers. As the virtual world and the real world intertwine, connecting touchpoints in this way offers the opportunity to carry a brand's presence and position closer to shopping. It is a massive opportunity but as with all opportunities there is a threat for those who don't seize it.

The retailers are already actively mining this source of shopper gold. So as worried as the UK's Office of Fair Trading clearly is about the use of online shopping data to manipulate consumer prices, retailers are still able to harvest shoppers' data to tailor their promotional offers to suit the customer; at least at the moment. Brands must also build a dialogue with shoppers online, in social or mobile media, to distinguish themselves and become a favoured choice for the shopper.

Online engagement offers many advantages to brands but retailer collaboration remains key (as Kellogg's approach illustrates) if they are to optimise the impact of their online activity and deliver the seamless multichannel convenience that shoppers are perennially seeking.

As new channels start to move centre stage with shoppers there are bound to be more opportunities for both national and retailer brands. Each player will be tempted to try to favour their own brand's position but the smartest will realise that the biggest opportunities lie in a determined and resolute focus on the shopper which puts their interests at the forefront of market strategy.

Shoppers will always want a mix of retailer and national brands, and as they increasingly move more multichannel to satisfy their needs, brands of all provenance will need to go with them if they are stay relevant and visible.