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March 18, 2009

UK: Tesco, Sainsbury’s defend own-label push

Tesco and Sainsbury's today (18 March) defended their campaigns encouraging UK consumers to turn to own-label products to save money.

Tesco and Sainsbury’s today (18 March) defended their campaigns encouraging UK consumers to turn to own-label products to save money.

The UK grocers have aggressively pushed their private-label ranges in recent months to appeal to the country’s growing number of cash-strapped consumers.

Tesco has introduced a discount range of products, while Sainsbury’s has promoted its own-label products against some of the branded lines in its stores with its “Switch and Save” campaign.

The moves have prompted some industry watchers to argue that some of the UK’s branded suppliers could see their sales threatened. However, at a retail conference in London today, executives from Tesco and Sainsbury’s said competition between brands and own-label is “healthy”.

Tesco’s UK marketing director Carolyn Bradley said the retailer’s recently-introduced Discount Brands by Tesco range had entered the gap between low-cost own-label lines and more expensive branded products.

“There are some branded ranges where there’s been so much value-add over the years that the product has got very expensive,” Bradley said at the Retail Week Conference. “That to a certain extent has left a gap and you expect people to flow into that vacuum.”

Bradley added: “It’s also healthy competition. We support and work with brands, sometimes it gets a bit tense but that’s life.”

Sainsbury’s CEO Justin King dismissed claims that the retailer’s “Switch and Save” campaign was critical of the branded lines carried in the company’s stores.

The campaign, King insisted, appealed to consumer concern for value amid the downturn, while also appealing to demand for products that met certain ethical concerns like Fairtrade and animal welfare.

“I know many view [Switch and Save] as brand-knocking advertsiing; it is no such thing. It is absolutely talking to consumers in terms they understand because it is what they are currently doing,” King said, insisting that consumers do not want to “compromise their eating experience” while saving money. “We’re simply asserting that by buying Sainsbury’s own label, you can do that,” he added.

King said he often defended Sainsbury’s own-label policy in the face of the retailer’s branded suppliers. “When I’m in a room of braned suppliers, I say: ‘What’s wrong with a bit of competition? If you believe your brand truly justifies the premium, then you have nothing to fear. If you don’t, why wouldn’t consumers want to save 20, 30, 40, 50% that they can with no compromise to their diets,'” King said.

In January, when Sainsbury’s published its last quarterly results, the retailer said its cut-price Basics range had been its fastest-growing line, with sales up 40% on the year.

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