Blog: Dean BestWhy IRI believes a price war is hitting private label in Europe

Dean Best | 6 January 2015

Brands are putting private label under increasing pressure in Europe, data from industry analysts IRI has claimed.

Fierce competition on price, high levels of promotions from brands and savvy shoppers are leading to an erosion of own-label sales across the region, IRI has said in a new report.

A year ago, France stood out as a market in which private-label sales were in decline but now the trend has spread across borders.

"Shoppers have traditionally seen private label as a good value option, helping to lower weekly shopping bills and a way for retailers to boost sales and grow their margins," IRI strategic insight director Tim Eales said. "But the landscape is evolving, driven by smarter shoppers and an aggressive price war being waged by retailers in many countries."

IRI said the data presented the "first private-label slowdown in Europe since the start of the economic recession".

Eales added: "Private label appears to have reached a ceiling in places like France, Spain, Italy and the Netherlands with value share slowing down or even in decline for the first time in seven years."

IRI's research also claims retailers have scaled back their promotions of their own-label lines, which, it said, has also played a part in brands winning market share.

"Private label is now in a mature stage and retailers are moving away from aggressive promotions activity and discounting. In fact, price levels have risen to meet the growing demand by consumers for better quality and premium products," Eales said.

Of course, private label still accounts for a hefty chunk of sales. IRI's report looks at seven European countries - the UK, France, Germany, Italy, the Netherlands, Spain and Greece. It said the combined value market share of private label in those European countries dropped by 0.1 percentage point in unit and value compared to a year ago, down to 38.7% of all value sales and 48.9% in unit sales.

However, the rampant promotional activity in branded aisles is having an impact on own label. Retailers keen to build successful own-label ranges - there is, after all, a potential margin benefit there - will have to work hard on differentiating their lines from brands, given price is becoming less of a weapon.

Sectors: Private label

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