One of the most notable features of senior management focus among the British superstores at present is the considerable attention being given to their own-label proposition.
What is interesting is that it is not the premium, value or other speciality lines that are attracting the most attention. Rather it is the middle ground, the mainstream own label that comprises the bulk of supermarkets' propositions.
Asda was first to the court, engaging in a major exercise to modernise its core own-label range under the Chosen by You banner. Sainsbury's is updating its whole mainstream own label under the By Sainsbury's tag and we expect Richard Brasher to refresh the competitiveness and vitality of Tesco's mainstream own label within the context of brands being given a materially higher strategic position across the group by Philip Clarke. Dalton Philips at Morrisons has also commenced the process of a major overhaul of the Morrisons brand, seeking not only to modernise but materially expand its participation rates from admittedly low relative levels.
The reason for all of this activity? Well, it is partly because retailers' minds have been focused on own label in reasonably segmented terms for some years Tesco Finest, Sainsbury's Taste the Difference and the like and so 'the middle' appears dated. However, there is perhaps another important angle and that is own labels' broader role in delivering value to British consumers at a time when living standards are falling at their fastest for decades. In this respect, own label is perhaps more overtly being used again as a tool to make branded manufacturers think again about pricing.
This is where current work is possibly a little different to recent years. Food price inflation feels reasonably structural, for well-versed reasons. However, when the UK consumer was a little less stressed than now, suppliers and retailers reasonably comfortably recovered input price pressure and more (broadly 2005-2010).
However, with inflation more broadly based and well ahead of income growth, retailers are much more worried about the consumer than much of the supply chain. Hence, mainstream own label is taking on a potentially more strategic role in the UK competitive environment and the longer that input price pressure and consumer stress persists, the more important the focus on the middle may be.