ISBN 1-84168-020-6

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Executive Summary

Table of Contents

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EXECUTIVE SUMMARY

Key Note estimates that the total value of the retail sales of all own-brand products in the UK reached £53.1bn in 1998, up from £44.1bn in 1994. This represents a 20.4 percent increase. Growth has been continuous since the early 1990s, although it dipped slightly in 1997.
Own brand is now a major force in British retailing across a variety of sectors. While most people associate own brand with food and grocery products, own brand is also a growing sector of the over-the-counter (OTC), clothing, cosmetics and toiletries and do-it-yourself (DIY) markets among others. Increasingly, the traditional brand manufacturers such as Ryvita and Heinz have moved into own-brand food production alongside major food producers such as Northern Foods and Booker. These large manufacturers have now been joined by niche manufacturers such as Noon Foods, which specialises in Indian-influenced own-brand food products.
During 1998/1999, there has been a major shift in the strategy retailers have employed to use own brands. Traditionally, own brands were used as low-end loss leaders, a strategy that reached its peak in the mid-1990s with the price-cutting wars between the supermarket chains. However, the multiples are now using own brands as a means of responding to customers' requirements and also reaching towards a higher end of the market. Examples of this include the new, higher quality own-brand ranges from Sainsbury's and Tesco that feature international cuisines. Additionally, the leading own-brand ranges have been among the first to feature products which are free of genetic modification (GM), products with low salt content and organic foods.
The major story for the UK own-brand industry in 1999 has been the declining fortunes of Marks and Spencer, Britain's biggest retailer. The decline of Marks and Spencer has highlighted two factors affecting the UK own-brand market. Firstly, retailers which become over-reliant on own brands suffer especially hard if that one brand (in Marks and Spencer's case, St Michael) loses popularity. Secondly, the decline of Marks and Spencer has hit British suppliers to the chain adversely and has had widespread ramifications for food and clothing manufacturers throughout the UK. The Marks and Spencer story has also highlighted the ability of low-cost producing centres in Asia and elsewhere to increasingly supply better quality own-label products.
The market for own-brand sales in the UK is forecast to grow by 26.2 percent between 1998 and 2003, to reach a total market value of £67bn. Several factors will influence the market's development, including the increased drive for customer loyalty by the supermarket chains and the entry of Wal-Mart, the largest own-brand retailer in the US, into the UK (through a merger with ASDA).

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

MARKET SECTORS

MARKET POSITION

MARKET TRENDS

Table 1: Estimated Own-Brand Share of Total Retail Sales by Value ( percent), 1994-1998

Table 2: Trends in Own-Brand Share of the Top Five Supermarket ChainsÅ by Value ( percent), 1994-1998

Market Size

THE TOTAL MARKET

MARKET SECTORS

GLOBAL AND EUROPEAN PERSPECTIVES

Table 3: UK Sales of Own-Brand Products (£bn at rsp), 1994-1998

Table 4: Own-Brand Sales in the Grocery Sector by Product Category (£000 and percent), 1997

Table 5: Own-Brand Sales in the Household Chemicals, Paper Products and Kitchen Aids Sector by Product Category (£000 and percent), 1997

Table 6: Own-Brand Sales in the Health and Beauty Sector by Product Category (£000 and percent), 1997

Table 7: Own-Brand Sales in the OTC Sector by Product Category (£000 and percent), 1997

Industry Background

RECENT HISTORY

INDUSTRY CONCENTRATION

TRADE ASSOCIATIONS

Competitor Analysis

THE MARKETPLACE

MARKET LEADERS

ADVERTISING AND PROMOTION

Table 8: Estimated Own-Brand Sales by Major Retailers ( percent of total sales), 1998

Table 9: Major UK Supermarket Retailers by Turnover (£m), 1998

Table 10: Profile of the Arcadia Group PLC by Retail Brand, 1998

Table 11. Major Suppliers to Marks and Spencer PLC, 1998

Table 12: Increase in Sales of Marks and Spencer by Product Group ( percent), 1998

Table 13: Main Media Advertising Expenditure on Own Brands by Selected Leading Retailers and Distributors (£000), Year to June 1999

Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Outside Suppliers to the Industry

INTRODUCTION

NATIONAL BRAND MANUFACTURERS SUPPLYING OWN BRANDS

Current Issues

GROWTH SECTOR IN TABLE TOP CONDIMENTS AND PICKLES

HOUSEHOLD CLEANING AGENTS NOW A MAJOR SECTOR

OWN LABEL BECOMES MORE IMPORTANT TO SUPERMARKET STRATEGIES

IMPROVED PACKAGING AND DESIGN

THE END OF 'COPYCATTING'

GROWTH IN THE COSMETICS AND TOILETRIES SECTOR

Forecasts

FACTORS INFLUENCING DEMAND

FORECAST 1999 TO 2003

Table 14: Forecast Own-Brand Sales (£bn), 1999-2003

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HOPPENSTEDT BONNIER INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1999 Key Note

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Last updated by Jacob van Eldik 22th February 2000