UK supermarkets could be missing a trick by not providing enough own label products, new research from Nielsen has suggested.
Nielsen’s ’Global Survey of Private Label’ also found grocery businesses could charge a bit more for own label goods.
Half of consumers would buy more own label products if a larger variety were available, according to the global information and insights company. And 55% would be willing to pay the same or more for own label if they liked it – up from 28% four years ago.
Some 37% of people in the UK, against 45% of Europeans overall, were less likely to regard own label products for those on tight budgets or for shoppers who could not afford the best brands.
Mike Watkins, head of retailer and business insight at Nielsen, said: “This indicates an opportunity for the supermarkets to further develop their own label ranges - from budget through to premium offerings - across other categories.”
Nielsen found own label products accounted for 54% of UK supermarket grocery sales in the year ending 21 June.
Sales of premium own label products grew 5.2% year on year in the UK – nearly four times the rate of overall grocery sales which grew 1.4%, Nielsen said.
Perception of own label products in the UK was higher than in Europe, with 71% of UK respondents believing quality had improved compared with 62% of Europeans overall. And 60% of people in the UK said the quality of most own label goods were as good as name brands.
Watkins said the perception of own-label products had improved dramatically in recent years.
“As with manufacturer brands, retailers have, over time, successfully built equity into their own label products by investing in product innovation, further developing ranges and increasing market activity.”
People in the UK had a much greater appetite for own label groceries than shoppers in other markets around the world, Watkins said.
“While most grocery sales in the UK are own label, in North America, it’s less than 20%; in developing countries, such as China, India and Brazil, it’s less than 5%; and in the Middle East, it’s no more than 1%.”
Nielsen found the categories with the highest penetration of own label sales in the UK were fruit and vegetables, almost 100%, meat, fish and poultry, 96%, and delicatessen, 80%. The lowest was health and beauty, 18%, confectionery, 22%, and alcohol, 25%.
“Even in categories where own label products have their lowest share of sales, they still have a healthy – and growing – slice,” Watkins said.
The growth of premium own label offerings meant many own labels were now a credible alternative for more and more items, Watkins added.