When I just came to the UK and do some shopping in the supermarket, I found something is quite different from that in China.
There are several supermarket giants in the UK such as Tesco, Sainsbury, even the pharmacy chain like Boots have their private-label products. Of course, some of the huge supermarket in China also have their own brand products as well. But the type of private-label products in Chinese supermarket is very limited. However, in British supermarket, private-label goods can be found in almost all kinds of goods, including even tissues and some of them occupied most of the shelves especially in the food area. It just made me feel like the shopping was taken place in an exclusive shop.
After researching, there are some figures really surprised me:
As the reported show (Bold, 2014), there are about 54 percent of sales in UK supermarket, which is generate by private brand, according to Nielsen. This proportion is much higher than the global average. Maybe that’s why I have that feeling.
So will the private-label products take over the supermarket? I believe that will not happen.
Obviously, the private-label brand strategy has a lot of strength as they are very easy to controlled. For example, these products need not cost much to do advertisements. They can be put on the best position without any cost. If customers have a good experience of one product, it can easily influence other goods. And for the reasons above, they usually have a lower,attractive price.
However, because of various of goods, they have not enough money for the innovation of their products. Thats why most of the private-label products are basic products. And the image of private-label in customers’ mind is poor quality in the past. But according to Bold (2014), more than half of customers believe that private brands has the same quality as the name one, this number was significantly larger than that four years ago.
That’s really a serious problem for other brands, isn’t it?
But on the other hand, other brand products have their own strengths as well. They have higher quality and some loyal customers as they have longer history and more investment on development of the products. So those premium brands are unlikely be substituted easily. And it is also very difficult for private-label products to replace some brands which have numbers of loyal customers like Coca-Cola. But what can be expected are that some brands need to make more effort to be attractive to keep their customers and some brands which are not that strong even will not survive in this battle. Although the private-label products can not defeat all the competitors, the situation people will face is that they will have fewer and fewer choice.
What do you think about it? Can you imagine all the products have the same label in the supermarket?
References:
Bold,B. (2014) Supermarket own-brands generate more than half of UK grocery sales. Marketing, 27 November. Available from: http://www.marketingmagazine.co.uk/article/1324180/supermarket-own-brands-generate-half-uk-grocery-sales [Accessed 4 November 2015].
edward 
Hi Edward, I have the same wavelength as you that own brand products are more popular in the UK than in China. I would say in China, consumers still hold the view that own brand products have low quality and under 90% circumstanes would not buy such products. This perception to some large degree is caused by the stereotype of own brand products and in fact, the low quality as well. Consumers just don’t want it. slightly lower price and a unsatisfied product?
However in the UK, I personally find that own brand products are of average quality and the price is significantly lower than others. So it is really fair for the supermarkets to promote their products 😛
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The reasons is that Chinese supermarket have no ability to control the manufacture and it is true that the private-label products in China lost the trust from customers because of some quality problems. And they did not pay much attention on these products and made the packaging so rough and seems unreliable. Maybe thats why private-label products are so undeveloped in China.
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fully agree with Ashley, most of supermarket labelled product’s price are significantly lower than the same category’s product. so i think low price can be regard as the competitive advantage for the supermarket to compete in the market. however, i am thinking about the reason for the supermarket to manufacturing its own labelled product, is because there is a price gap in the market, or the supermarket is trying building the brand loyalty, or just want to simplify the consumers’ decision on diversity brand category.
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In fact, I think the main reason why supermarket launch its own-label products is the profits. As I mentioned in the blog, own-label products create 54 percent of sales for the supermarket in the UK, as the cost of them are much lower than the named brand products, they actually get a huge profits from these goods.
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