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Little shop of brands

How ironic that the outgoing Coles Managing Director John Durkan said the retailer wants to increase private label penetration to 40% by 2023 and yet their ‘Little Shop’ promotion of mini branded products has had such a positive impact on business that they’ve extended it another month. (And no it’s not just so you can get the mini Nutella pack!).

Would the promotion have been as successful if they were private label minis, or do consumers connect more with these little pieces of plastic because they are brands that they love?

The rise of private label

Citigroup analysts have estimated Coles private label penetration is currently at around 28% of total grocery and to meet their aggressive target of 40% by 2023 they need to drive growth in packaged grocery goods.

So for consumers this will mean a reduction in choice and whilst Durkan insists that this is due to customer demand rather than forcing branded goods off shelves, the shopping aisles will change and not necessarily for the better.

Getting it right

So how do brands get battle ready for the next five years and what are the opportunities for growth and innovation. 

1.     Health

The trend for healthier products across categories continues to be a priority for Australian consumers. Growth in low sugar and wellness products is not confined to one demographic but is becoming a new Australian mainstream behaviour. Consumers have demonstrated that they are prepared to pay more for products that have clear health benefits, a real opportunity for brands to build value.

2.     Premiumisation

Australia sells 40% of its products on promotion, one of the highest in the world. This has given rise to a consumer that is extremely price aware, driving behaviours such as pantry stocking or shopping across multiple retailers to get the best price. This is not a long-term strategy and can devalue a brand in the eyes of their consumers. Premiumising your brand through innovation, limited editions, driving new occasions and delivering experiences are all still relevant ways to elevate your position no matter what category you are playing in, consumers are only as price sensitive as you make them. 

3.     Distinctiveness

Ensuring your brand is telling an authentic, brand led story is key in differentiating itself within the category. Whilst playing to category cues aids familiarity standing out from the crowd is more important. For example take Woolworths new private label packaging which now in some categories looks foodier than some of the more expensive brands on offer and that’s just down to some nice photography.

In conclusion

Australian consumers love brands more than their European counterparts and the rise in private label share has been much slower this side of the pond. And whilst we can’t quantify the success of the branded minis versus a private label version, we can conclude from the emotional responses of consumers that seeing something so recognisable but in a mini format tells us how important distinctive brand assets are for a brand.

 

Claire Riley
Founder & Strategy Directory, The Mill Brand Design Agency, Melbourne
Contact Claire if you would like to take advantage of her 20 plus years in the branding and packaging industry. With experience in the UK and Australia working on consumer goods brands, from cheese to gin and everything in between, Claire is passionate about creating unique brand assets that tell stories and increase the bottom line.

Rob Riley