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This report covers the development and direction
of the own-brand concept in the 1990s. The report deals mainly with the grocery
sector, the original developer of own brands, but also covers the emergent
own-brand sectors including do-it-yourself (DIY) retailing, chemist retailing
and wholesale cash and carry. However, at present, these remain minor sectors
in both value and volume terms and are, therefore, treated in less detail.
However, their inclusion indicates that the own-brand market in the UK is
rapidly diversifying.
Key Note estimates that in 1996, total sales of
own brands were worth £48.4bn. This represents a 35.2 percent increase over the
1991 level. The main reason for the growth in own-brand sales has been the
intense competition between the grocery multiples in 1995/1996, which has seen
severe discounting of popular own-brand items in order to stimulate customer
loyalty in conjunction with the spate of loyalty card offers launched.
The grocery retailers have purposefully chosen the most popular items --
baked beans, sauces, foil and tinned fruit -- in order to promote generic own
brands, and an overall reduction of the cost of a typical shopping basket.
Naturally, the multiples have looked to increase sales of more expensive
branded items at the same time. Therefore, in effect, own brands were used
extensively as loss leaders in 1995. However, the overall range of own-brand
products has grown, as has their variety and level of quality. Own brands have
been instrumental in introducing new products in many sectors including pet
foods, salads, cooked meats and coffee.
With the growing diversity in
own-brand ranges, there has been a casualty, namely subbrands, which have been
largely removed from sale following the discovery that consumers were confused
by these products. Additionally, there has also been a growth in the number of
legal cases brought by branded goods manufacturers against the multiples
concerning lookalikes.
In 1994, own brands appeared on the brink of
decline, but have grown due to heavy discounting and large volume sales. With
this intense competition has come the news that few branded manufacturers feel
able to remain outside the own-brand market, and the proponents of own-brand
goods loudly applauded the decision of HJ Heinz to enter private label
manufacture in 1996 for the first time. Growth of 21.5 percent in own-brand sales is
forecast between 1997 and 2001.
Text © 1997 Key Note
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Last updated by Duncan Nottage 5th March 1999