Aldi Oaklands Park store manager Lucy Luders. The German discounter’s aggressive private label strategy has paid off, according to new research.
PRIVATE labels have finally taken over.
The majority of Australians now tend to buy private-label groceries over big-name brands, according to consumer research company Canstar Blue.
Just under two thirds (65 per cent) of shoppers now prefer private labels, an increase of one fifth from just six months ago when that figure was 44 per cent.
The increase goes hand in hand with improved perceptions of quality, with more than three quarters (76 per cent) of shoppers rating private label brands from Coles, Woolworths and Aldi as ‘good quality’.
That compares with 59 per cent in June 2015.
“Unless you have a strong preference for a particular named brand, chances are you will perceive the private label alternative to offer better value,” said Canstar Blue’s Megan Doyle.
“You need to be convinced that a big name brand is superior in quality to spend the extra money. With private label products improving, the difference in quality seems to be narrowing and consumers are simply following the cheaper prices.”
While private labels have traditionally been seen as cheap and nasty alternatives, perceptions are changing and consumers are switching to save. “There has been a huge change in attitudes in a short space of time,” she said.
“It’s no coincidence that this change is happening at a time when the major supermarkets are placing more importance on their private label offerings than ever before, with Coles and Woolworths trying to cut prices and improve quality to stem the flow of customers to Aldi.
“The challenge for the big two is convincing consumers that they can do a cheap, big shop at their stores — that means convincing them about the quality of their home brands. A large increase in the number of shoppers favouring private labels suggests their efforts are paying off.”
When it comes to salt and pepper, do you really care what brand it is? Picture: iStockSource:Supplied
According to market research firm IBISWorld, private-label products currently account for around 30 per cent of all food and grocery sales in Australia. That figure is tipped to approach 35 per cent by 2020-21.
“This compares with over 53 per cent in Europe and 35 per cent in the United States, indicating that there is room for expansion in Australia,” said IBISWorld industry analyst Brooke Tonkin.
Online retailer Ruslan Kogan, who built his business on cut-price private label electronics, argues an easy way to see which brands matter to shoppers is to walk into an Aldi. “You’ll see Nutella. You’ll see Coca-Cola. You’ll see Milo. A handful of brands,” he said.
“But when you’re buying chilli flakes, you don’t care if it’s MasterFoods or McCormick. Or salt and pepper, or flour, it makes no difference. That’s what the supermarkets have realised.”
Consumers polled by Canstar rated home brands their favourite in five out of eight staple categories, with four Aldi products edging out their brand-name competitors, while Coles was rated highest in another.
The remaining three categories were won by big name brands — Devondale, Burgen and Nuttelex.
“Even in those categories won by big name brands, supermarket private labels still performed well,” said Mrs Doyle. “Some Coles and Woolworths products were rated highly, but the overall picture is that Aldi brands are impressing most.
“The supermarket focus on private labels means cheaper groceries for consumers, but it could also mean that only the most popular brand names will survive on supermarket shelves in the long-run. Some brand names are facing a fight to survive.”
According to Canstar, another significant change over the last six months is the number of shoppers who allow the cost of basics determine where they shop.
Almost half (49 per cent) said the cost of staples such as milk, bread and eggs determines where they shop, up from 35 per cent six months ago.
The study was based on a survey of 3000 Australian consumers taken in December 2015, compared with the same study conducted in June 2015.
CUSTOMER SATISFACTION RATINGS: BASKET STAPLES
• Milk: Devondale
• Long-life milk: Coles
• White bread: ALDI Bakers Life
• Wholemeal bread: ALDI Bakers Life
• Multigrain bread: Burgen
• Margarine: Nuttelex
• Butter: ALDI Beautifully Butterfully
• Eggs: ALDI Lodge Farms
(Source: Canstar Blue)
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