Retailers across Europe are adopting varying private label strategies in order to close the price gap with the discounters, a new report by International Private Label Consult (IPLC) has found.
In the report, Mind the Gap, IPLC analysed the private label architecture and pricing strategy of 16 retailers across eight countries. Lidl was used as a representative from the discounter market, with the findings compared against IPLCs previous 2016 research, Retaining Consumers Tempted by the Discount Model.
Through the research, IPLC has concluded that many more retailers are actively seeking to reduce the price gap between them and the discounters. To achieve this, they are not simply reducing their prices, but are instead adapting their private label architectures.
Price Gap
The result of this activity has seen the price gap of standard private label close, IPLC said. Compared to national brands, standard private label is now 47% cheaper, a significant shift from 2016, when it was 33% cheaper.
The average price gap between Lidl and national brands, meanwhile, has remained roughly cheaper by the same amount now (55%), compared to 2016 (54%).
The combined effect sees a significant reduction in the price gap between mainstream retailers’ private label and Lidl, from 21% in 2016 to now 8% today (across a selected range of products).
'This noticeable increase in the use of private label to combat the discounters bodes well for the future growth of private label volume share in all European markets,' IPLC said.
Founded in 2003, International Private Label Consult (IPLC) is a specialised consultancy for the private label sector, with offices in Netherlands, Germany, France, United Kingdom, Spain, Italy, Belgium, Ireland and Portugal.
© 2021 European Supermarket Magazine. Article by Stephen Wynne-Jones. For more Private Label news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.
