Sales of branded products are growing faster than own label for the first time in four years, according to Kantar Worldpanel data, due to the discounters’ slowdown and more brand pricing promotions.
Brands were last growing faster than own label in March 2011, when value was up 4.2% year on year versus a 3.4% increase in own label.
Since then, the discounters have played a key role in keeping own-label growth at least one percentage point ahead of brands. With own label accounting for the majority of Aldi and Lidl sales, every point of grocery market share the discounters had taken from the mults had resulted in own label gaining 0.35 market share points from brands, said Kantar Worldpanel director Chris Longbottom.
“However, as the big four begin to fight back, we’re seeing growth diminish in this area.”
Slower discounter growth - Aldi’s market share has grown 16.8% year on year [Kantar 12 w/e 29 March 2015] versus 33.5% a year ago - has prompted the slowdown in own label. A cut in own-label prices has also contributed.
Own label had also slowed as a result of brands promoting more, said Waitrose boss Mark Price, guest editing The Grocer this week. He added this May would be a “moment of truth” for the industry. “In May last year Morrisons collapsed prices to meet the discounters and you got a domino effect,” he said. “We have seen massive price deflation since then and in May we annualise on that, and the debate will be ‘do retailers go lower than the discounters this time round?’”
“May will be where we start to bottom out - and may say we have got to parity and don’t need to do any more. With discounters slowing, we may now be getting to a point where pricing has become neutral.”