CHICAGO, Nov. 13 /PRNewswire/ -- $55 billion in annual supermarket
sales could shift from national brands to store brands if the aggressive
private label strategies of several large, high-performance retailers are
emulated by other major chains.
The projected shift was outlined by McKinsey & Co. in a breakfast
presentation today at this year's private label industry trade show in
Chicago. It is based on a study completed by the consulting firm entitled
"New World of Brands: The Next Wave of Private Label."
Kari Alldredge, a Principal at McKinsey, and Matt Spanjers, an
Associate Principal, delivered the findings.
Brian Sharoff, President of the Private Label Manufacturers Association
(PLMA), which has organized the trade show for nearly 30 years, called the
McKinsey report "astounding" and said that it is one of the few studies
that correctly analyzes the impact that cutting-edge retailers are having
on the supermarket industry.
"What we are seeing today is the transformation of food retailing from
regional and local grocery chains to national supermarkets, supercenters,
warehouse clubs, and specialty gourmet chains that are committed to making
their own brands into nationally-known brands. And they are succeeding
beyond anyone's estimation," said Sharoff.
"The launch this week of Tesco's new Fresh & Easy stores in California
is one more indication of this trend," Sharoff said.
In the McKinsey study, the private label capabilities of more than 70
retailers were analyzed and several trading partners -- national brands as
well as private label -- were interviewed. The report identifies retailers
who "have successfully used private label as a key differentiator and to
build consumer loyalty."
According to the research, "the bulk of retailers" are lagging behind.
If, says McKinsey, these lagging chains begin to emulate the private
label share leaders and pump up their store brands to drive growth and
build consumer loyalty, it could result in $55 billion in annual sales
migrating from national brands to private label in categories across the
A shift of this magnitude is consistent with the experience of store
brands in Europe, according to McKinsey. "In the 1990s, as many European
retailers began to understand the impact that private label could have on
their business, private label share more than doubled in several major
markets." The report singles out Tesco, the U.K. retailer, which increased
its private label share by three percentage points annually from 21% to 34%
over four years.
The success of private label in Europe has definitely made an
impression on U.S. retailers. "In our interviews-and in public
statements-current share leaders and private label 'up and comers' share
the aspiration to reach dollar share levels and growth consistent with the
European leaders," the McKinsey report concludes.
The McKinsey study is also buttressed by recent consumer research
commissioned by PLMA and carried out by Ipsos-MORI, a well-known
international market research firm. Their report showed that 41% of
shoppers in the U.S. now identify themselves as frequent store brand
shoppers, up sharply in recent years. The research also found that
consumers are now more aware of store brands and more likely to buy store
brand products than ever before.
Reflecting the growth in private label, this year's PLMA trade show
presented more than 2,000 exhibit booths exhibiting the latest private
label products, packaging and promotional ideas in categories ranging from
fresh, frozen and refrigerated foods, snacks and shelf-stable groceries, to
health and beauty, household and kitchen products, paper and plastics,
general merchandise, consumer electronics, home/office and DIY.
Founded in 1979, the Private Label Manufacturers Association has more
than 3,000 member companies worldwide. Trade shows and conferences include
PLMA's "World of Private Label" International Trade Show which is presented
in Amsterdam each Spring.
SOURCE Private Label Manufacturers Association