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8/14/2019 Private Labels VF
http://slidepdf.com/reader/full/private-labels-vf 1/19
Karolina Galka
Alexy Celis
Dominique Tourrès
Loïc Sèbe
Béatrice de Ferrières
Private Labels in France
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Introduction A private label is a retailer own brand that can be sold
only in the retailer group stores (art. 62 – NRE act of may 15th 2006).
Example : « Marque Repère », « Monoprix Gourmet », « MieuxVivre Bio», « Casino Délice », « Reflet de France », etc.
1 out of 3 purchased product is a private label*
A private label is 37% less expensive than a nationalbrand*
Private labels keep on growing , near 10% in turnoverper month*
Each retailer has its own label and extends its range of private labels
How private label modified Retail IndustrialOrganization?
What are the retailers strategies ?
What is the near future ?*Nielsen for PLMA
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AgendaIntroductionStructure of the marketHistoryCharacteristics of the private labels marketPerformances of the private labels market
Main strategiesPrice strategyDifferentiation strategy
New trends and challengesConclusion
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History (1/2)
1901 : Birth of Private labelCopy of National brand convenience goods.
(no quality, no design, no retailer image / strategy)1901 : Launch of the first private label by Casino
(grocery, charcuterie, cosmetic, sodas, etc …)1928 / 1931 : Launch of Monoprix / Prisunic on basic
products at low prices & limited quantity
1975-1985 : The revolution of free
productsBasic & low price product with high retailer recognitionagainst national brand
1976 : Carrefour launched 50 generic products
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Characteristics of the privatelabels market
Manufacturers can be classified inthree general categories:
Large-scale manufacturers that produce
both their own brands and Private Labelproducts
Medium and small manufacturersspecialized in particular product lines and
concentrated almost exclusively onproducing Private Labels (70 to 80% of theprivate labels production)
Retailers become producers and theirown suppliers they become competitorsto the manufacturers : Vertical
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Competitive environmentPrivate Labels compete directly with:
National brand productsHard Discount
Entry barriersRetailers have their own distribution network and don’thave to pay any fee to sell their products in thesupermarkets
Retailers are free to decide their merchandising
Consumer 68% believe that private labels have nothing to envy
to the national brands (Nielsen 2008)
A household spend per year 25% of his budget inprivate label (50% for students) (Nielsen 2008)
Characteristics of the privatelabels market
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Performances of private labels
Nielsen for PLMA
Market shareX 2 in 15 years
Market share
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Performances of private labels
+0,8+1,5
+2,6+1,2+2,8+1,9+2,5
+3,4+1,5+1,5+4+5,4
+2,3
points of evolution.
Casinoleader
with37,9% of marketshareand +5,4
points
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Performances of private labels
Turnover evolution in 2007 (%)
Private label monopolize the market growthNiri, InfoScanCensus
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Strategies of the private labels
Operational result / Added Value
7%
5%
9%
18%
12%
10%
8%
9%
10%
13%
12%
16%
6%
15%6%
14%
Source: CREDOC 2005
1% < Advertsing expenses / Turnover < 4%
4% < Advertsing expenses / Turnover < 8% Advertsing expenses / Turnover >= 8%
Over 80% of the turnover Private Labels Producing Firms
4% < Advertsing expenses / Turnover < 8%
Advertsing expenses / Turnover >= 8%Between 20% and 80% of the turnover Private Labels Producing Firms
Advertsing expenses / Turnover < 1%
Advertsing expenses / Turnover >= 8%Less than 20% of the turnover Private Labels Producing Firms
Advertsing expenses / Turnover < 1%
1% < Advertsing expenses / Turnover < 4%
Private Labels Non Producing Firms
Advertsing expenses / Turnover < 1%
1% < Advertsing expenses / Turnover < 4%
4% < Advertsing expenses / Turnover < 8%
The more private labels suppliers produce, the moreprofitable they are.
Ex: 85% of the Frozen vegetables market is Privatelabels.
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Current strategies
The traditional view always existsbut retailers develop a real
marketing policy:
To propose product differentiation
To encourage customer loyalty
To develop their brand image
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Development of larger range of products
Propose products for each consumer groupand answer the new trends in consumption:Down-market products low price
Fair trade products
Organic food
Authentic products
Exotic products
Offer quality and low-price products forevery market segment.
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Promotion To encourage customer loyalty : Communication about quality and price
Discount
Fidelity card with special operation (discount, fidelity points)
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New trends & challenges (1/2)
New trendsNew market & increase of range,
Innovation,
Adaptation to the new ways of consumption :Healthy / Natural
Sophisticated product (premium)
Environmental packaging & product
Sustainable development
Ease of use packaging,
example
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New trends & challenges (2/2)
Challenges Transfer private label as the favorite brand of
consumers (advertising since the 1st January2007),
Growth despite price down of national brands(LME law) and launch of low cost nationalbrand products
Growth despite financial crisis (boom of hard
discount)
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Conclusion
Private labels are a major actor on the foodmarket and influence it on :
Structure : With more than 30% of the marketshare, Private labels are on direct competition
with their own suppliers / national brandsConducts : Focus now on innovation,
communication & every day low price, Privatelabels are the price reference
Performances : +75% of new products in 2years, +10% of turnover per month, Privatelabels pull and monopolize the growth of thefood market.
But with the financial crisis will they keep on this