In the May/June 2024 edition of ESM, we spoke to several prominent operators across Europe about how they are enhancing their private-label offerings, including Lukas Ziegler, Director, Buying And Category Management, Private Label, Lekkerland.
What recent trends in private label have you observed in your business, and also the wider market?
Consumers’ desire to catch up in consumption after years of the pandemic and the return to the office led to growth in the OOH market. The convenience orientation of customers is thus on the rise again, however, the reduction in consumers’ real disposable income – not least driven by the persistent price increases of recent months – is leading to tighter budgets and a lower willingness to spend.
Alternative-price products are increasingly being considered as possible equivalent substitutes. Alternatives that have been found to be good have become part of the new routine in shopper behaviour.
As a result, consumers’ expectations on the availability of private-label products is increasing, and there is a stronger demand for a greater depth and breadth of such product ranges.
Most European countries have seen inflation ease in recent months. Do you think that this will affect private-label purchasing, as brands become more competitive?
Inflation will continue to be one of the dominating topics of the industry in 2024 and definitely affect consumers’ behaviour. That is especially true since most consumers still have their ‘price memory’ – i.e. the known reference price for products – set on times and prices before the Ukraine war or the pandemic. Therefore, consumers will not automatically return to manufacturers’ brands once inflation slows down.
In contrast to most brands, private-label products were able to keep their value-for-money promise, even during periods of high inflation.
In what categories has private label performed particularly well for you over the past year, and why?
Strong demand from customers has led to a substantial growth of our private-label products. In addition to the expansion in distribution of the core product range in the foodservice sector or beverages, in which we traditionally offer a well-positioned range of private labels, we have developed trendy new varieties in a targeted manner and picked up on social-media trends in product development at an early stage.
Our Take Off Space Cat can – a winner in the European Private Label Awards – is a good example.
In the confectionery and impulse segment, we developed new products in a targeted manner in a handy convenience format, with great success. These range from chewing gums to chocolate peanuts and to nut mixes, in a handy 25g format.
Private-label products are traditionally split into three tiers: value, standard and premium. Which of these has shown the most growth for you?
The value tier has been the frontrunner in terms of demand growth on our customers’ side. At the same time, the standard segment also has seen an increase in demand, since consumers do consider private-label products in this category to be a reasonable alternative to branded products.
What opportunities do you see for retailers to maximise the growth of private label in the years to come?
As well as continuing to focus on our value-for-money approach, new topics, such as sustainability, are becoming increasingly relevant. We are approaching those with our ‘smart engineering’ approach, as part of the targeted expansion of the product range.
As a result, from the consumer’s point of view, private label is increasingly becoming a useful addition or alternative in the shopping mission.
