
In this interview I had with Jon Wright, Head of EMEA Retail Insight at IGD, we talked about today’s climate for private label foodstuffs and the trends associated with this segment.
By Dan Orehov
How would you characterize the global private label food market at present?
At a global level, private label is becoming a key differentiator for retailers. To stand out in crowded local markets, retailers are driving innovation with their private label ranges to encourage shoppers into their stores and grow average basket spend. One retailer that has maximized this potential is US-based Kroger, which has looked to move private label ahead of where branded products are in certain categories. Kroger believes that innovation within private label is getting so good, that brands are now looking to retailers and their manufacturers for inspiration rather than the other way around.
The potential for retailers to drive this growth and benefit from it is being aided by shoppers’ further acceptance of private label ranges. Millennials are more willing to try private label alternatives, especially where they believe the retailer is offering something innovative or focused on driving wider social benefits.
Where does own label frozen food fit into this market?
Frozen food is benefiting from the same trends, with retailers investing in their ranges to improve their quality. As with the wider category, retailers are using frozen food to enable shoppers to create meal solutions easily, especially when needed at short notice, and to help drive footfall to stores. One retailer that has long innovated with private label is Ahold Delhaize. It has used its ranges to drive differentiation and attract shoppers to its stores. A focus on own brands is one of the five accelerators the company has identified to deliver self-funded growth as part of its sustainable business model aim. Showing how this can be used to develop an offering further, Rexall, the second largest drugstore chain in Canada is piloting a new retail partnership with M&M Food Market, a frozen food specialist in the country. Rexall is building small stores, approximately 200 sqm., that are focused on entertaining and providing meal solutions for time-pressed shoppers. A key element in this is the frozen offer from M&M.
What are some of the main trends currently defining the own label food market?
The growth of discounters has encouraged retailers to reevaluate the importance of private label within their strategies. For some, this was a defensive mechanism, but over time has evolved to be a key lever with which to differentiate from competitors. For best in class retailers, this has seen them look to develop innovative ranges that meet shoppers’ changing needs, rather than simply mirroring what brands are doing. For US-based Kroger, its fastest growing brands are those in the natural and organics space: Simple Truth and Simple Truth Organics, while its competitor Albertsons has developed O Organics and Open Nature. In the latter example, the retailer has extended the reach of its private label ranges by working with Instacart to establish an ecommerce site that showcases its organic and natural private brands, under the Organics Market brand.
Elsewhere, we have seen innovative strategies including Netherlands-based Albert Heijn relaunching its Delicata chocolate brand. As part of the relaunch the retailer took away the Albert Heijn logo from the product, instead saying ‘produced for Albert Heijn’ on the packaging. The quality of the product was also echoed by the creation of a standalone website for the private label brand.
You can read the entire article in the March-April 2019 print issue of Frozen Food Europe.