ECONOMY

Traditional brands losing ground to cheaper ones produced by supermarkets

About one in every five products bought by consumers at supermarkets are so-called own-brand products, i.e. produced by the store that sells them. These products seem to be chosen by more and more consumers, not only for their low prices, but also for reasons of quality. A new study by the Athens University of Economics and Business (AUEB) shows that 51 percent of consumers consider generic products to be of the same quality as those of more well-known brands. The growth of own-brand products has been rather rapid and their prospects appear quite good, thanks to the general economic downturn and market conditions with the entry of discount chains (Lidl and Plus are already here, while Aldi is expected soon). The market is aware that the expansion of generic products is causing major headaches for Greek industry, contributing in turn to the creation of new products with high nutritional value. Recently the Hellenic Association of Known Brand Product Industries (ESVEP) ran a campaign in support of their products. This new quantitative survey was one of the largest, as it involved 2,000 people and was conducted recently by Georgios Baltas, alternate professor of marketing and communications at AUEB. It reveals that 49 percent of people are satisfied with generic products. Their main draw is their price, with 89.2 percent believing that they are better priced than rival products. Consumers answered that they would easily purchase generic products in the following categories: Kitchen and toilet paper, house-cleaning products, laundry detergents, etc. On the contrary, they would rather not purchase generic coffee or alcoholic beverages. For example, 73.6 percent would buy own-brand kitchen and toilet paper, but only 15.4 percent would choose generic alcoholic drinks. Crucially, their view of a supermarket chain varies according to their personal generic product preferences. On the question of quality, 41.3 percent believe that generic products are worse than famous brands, 51.5 percent consider them of the same quality and even 7.2 percent of people asked considered them better. In terms of the look of the labels, 44 percent believe they are not as good as well-known brands, 5 percent think they are better and a majority (51 percent) considers them equally good. Asked about the reputation of own-brand products, 59 percent answered it is worse than that of famous brands, 36 percent said it is the same and only 5 percent said they have a better name than well-known brands. One in two consumers (52.9 percent), the AUEB survey found, considers generic labels the same as those of producers. Respondents also stated the percentage of the products they purchase in supermarkets that are own-brand: The average figure reached 17.1 percent, while 22.8 percent of respondents said that own-brand products account for more than 25 percent of their purchases. «The market’s general direction favors generic products,» explains Baltas, «and offers a historic opportunity to major trading companies to build their own brands and consolidate their presence, not only as retailers but also as brand owners. Supermarket chains ought to maintain the strategic advantage of price, while improving some of the features of their products,» he says. Famous brand defense Many traditional brands that are losing ground to own-brand products must face up to reality and «revise antiquated strategies, which they often follow despite their proven inefficiency,» argues Baltas. The shrinking of the market share of a brand has multiple negative effects. Baltas notes that, besides the direct impact on sales, the indirect consequences are also quite serious: diminished strength in distribution networks and loss of prestige, among others. «Although it is evident that a famous-brand product has additional expenses that usually do not allow for price levels near those of generic products, there is often scope for increasing competitiveness,» he states. On a more positive note, the AUEB alternate professor believes that the development of own-brand products revitalizes the domestic production of consumer goods and drives out some of the imports. «Greek industries are now intensively active in producing goods for major chains and are earning sales that would not have been possible had they just put their products on the market in brands,» suggests Baltas.