The private label phenomenon is going global, with Australian supermarket chain Coles looking to replicate the success of retailers such as Tesco and Wegman's by rolling out a multi-tiered private label offering, with three new private label brands. This approach is a novel means by which the chain can differentiate itself in the increasingly competitive Australian retail landscape.

The phenomenon of introducing a multi-brand private label strategy is not one restricted to the US and Europe. Coles is launching three new private label brands: the premium "George J Coles" brand, the mid-tiered "You'll love Coles" range and the budget "$mart buy Coles" labels. The three-tiered approach represents an effort to alter the perception of private label products in Australia from being low quality bottom end products.

Coles has taken a leaf out of UK and US retailers' books by adopting a multi-tiered brand strategy. The popularity of private label brands from the likes of Winn-Dixie in the US, and from Sainsbury and Tesco in the UK is a strong indication that the move could provide a useful means of extending its product portfolio, strengthening the Coles brand image and improving its bottom line.

Coles' major rival Woolworths began the roll out of its "Woolworths Select" brand over a month ago, providing an upscale alternative to its longstanding Homebrand canned goods. Coles' retaliation could provide strong competition if the example of Tesco's success in the UK is anything to go by. Tesco now holds a 30% share of the market there. Many attribute Tesco's success to the way multiple house brands such as Tesco Value, Tesco Finest and Tesco's Free From broadened the supermarket's consumer base, seizing share from Marks & Spencer at the top end and the likes of Lidl and Aldi at the bottom. Tesco also reduced its buying costs by cutting out third parties from the supply chain.

In the US meanwhile, Wegman's is one of few retailers currently taking share from hypermarket behemoth Wal-Mart, and its appeal to consumers in part stems from its private label-only proposition.

The future seems bright for Coles. Its target of having 30% of its sales derived from private labels by 2007 may seem somewhat ambitious, given that the national percentage of private label products bought currently stands at 12%. Yet its strategy of pitching its private label offering at the full spectrum of Australian consumers suggests it is well placed to replicate the success enjoyed elsewhere by the likes of Tesco.

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