Own-label products show fatigue

Major retailers are making fewer investments in the development of private-label products compared with the recent past.

The price war that has raged in the last few years both among retail merchants and between retailers and suppliers in a bid to retain their market shares during a period of an ever-decreasing demand due to the crisis has resulted in a reduction to the cost of popular brand products, mainly through an increase in offers.

For their part, retailers are trying to increase their profit margins by nudging the prices of their own-label products, leading to a drop in the difference in prices between well-known brands and private-label products.

A different policy is being pursued by small and medium-sized supermarket chains. Having less negotiating leverage by definition in their transactions with suppliers and being unable to secure better deals on popular brands, they are increasing investments in the growth of own-label products as a means of tackling the competition.

However, despite the drop in households’ disposable incomes and the doubling of the market share of private-label products in Greece in recent years, their performance still lags compared with other European countries, while their penetration in Greek households is showing signs of fatigue. Data from the IRI research institute showed that the market share of private-label products reached 15.4 percent last year, growing by just 0.6 percentage points from 2013. Their volume share actually remained unchanged year-on-year at 20.8 percent. The total turnover of private-label products in 2014 is estimated at 500 million euros.