Opportunity knocks for private brands
A new report from Nielsen offers plenty of good news globally for private brands. The title of the global market researcher’s report, “The Rise and Rise Again of Private Label,” pretty much says it all.
“There is a new retail revolution underway, and it’s going to affect the food industry across the globe over the next five years in ways we have never seen before,” the report states. “We’re talking about the development of private label products.”
The report stresses that private brand growth will occur at brick-and-mortar stores and online. Nobody should be surprised, considering how far private label products have come in the past 10 years in regard to quality, differentiation and exclusivity. Consumers around the world have discovered and continue to discover the value that private brands present.
“In the brick-and-mortar world, when shoppers visit stores more often, they will purchase more private label products,” the report says. “As the online share of fast-moving consumer goods (FMCG) sales continues to grow, this behavior is very likely to be replicated in the e-commerce world.”
That’s not all. Private brands from one country will continue to become accessible to consumers in another country because of e-commerce, which could generate sales and market share of retailers’ private brands around the world.
Consider The Kroger Co., the world’s third-largest supermarket chain. The Cincinnati-based chain recently struck a deal with China’s Alibaba Group Holding to sell its products on Alibaba’s Tmall global site, a platform for international brands. And what will Kroger sell? Products from its organic and free-from Simple Truth private label line, which has achieved more than $2 billion in sales in the U.S. Soon, more than half a billion Chinese consumers will have easy access to America's largest natural and organic brand. Simple Truth is arguably the greatest private label success story ever in America. There’s no doubt that Chinese consumers will embrace the products.
“E-commerce enables Kroger to quickly scale to reach new customers and markets where we don't operate physical stores, starting with China," said Yael Cosset, Kroger's chief digital officer, in a press release. "We anticipate Chinese consumers will love [Kroger’s private label offerings] — starting with Simple Truth products — just like our American customers do.”
According to consumer research firm Kantar Worldpanel, online sales of FMCG grew 30 percent in the 12 months ended in March 2017 and now account for 4.6 per cent of global FMCG sales, up from 4.4 per cent a year earlier.
Online sales of FMCG are also surging in developing countries, Kantar Worldpanel reports. The fastest-growing online FMCG markets over the same 12-month period were Thailand (up 104 per cent), Malaysia (up 88 per cent) and Vietnam (up 69 per cent).
There’s no doubt there will continue to be more international online platforms that will provide retailers from all corners of the world the chance to sell their private brands online to consumers around the world. It’s a revolution for sure, and an opportunity for private brands to succeed globally like never before.