THE RISE OF THE PRIVATE – LABEL RETAIL CATEGORY IN SOUTH AFRICA

Must Read

2020 Brand Africa 100: These are the 10 most admired brands in Africa

NIKE RETAINS #1 IN AFRICA FOR THIRD YEAR IN A ROW AFRICAN BRANDS DROP BY OVER 60% IN...

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is...

Top 10 Most Expensive Universities In Nigeria

For many Nigerians, high-quality higher education is a luxury. There are many private universities who are known not only...
THE RISE OF THE PRIVATE - LABEL RETAIL CATEGORY IN SOUTH AFRICATHE RISE OF THE PRIVATE - LABEL RETAIL CATEGORY IN SOUTH AFRICA

Recent years have shown an upward trend in the private-label (PL) category in South Africa, with improving consumer perceptions and the greater focus from retailers to develop the category. Hence, despite the tough trading conditions off the back of low economic growth and curbed consumer confidence, there is excellent growth potential within South Africa’s R43-Billion Private Label retail category. (Private label is products sold exclusively by a specific retailer or chain of stores.)

These insights stem from the 2017 Nielsen State of Private Label in South Africa syndicated report which shows that PL has maintained its growth rate since 2016, with its share of total sales have climbed over 20% in 2017. Although this represents a small 0.2% gain over the previous year, this growth is ahead of branded product sales and is expected to continue into 2018.

Of interest, is the fact that at present the higher LSM* 7-10 markets account for 50% of private label spend but lower LSM 1-4 has shown double-digit growth and an increasing share of spend. This provides an excellent opportunity for the growth of PL within the low to mid-LSM groups.

Consumer confidence is down, inflation is up, debt is high, and people are under pressure. Against this backdrop, PL is proving to be a viable, quality option for consumers and is ahead of branded products in growth. The fact that PL share has moved over the 20% share of sales mark also shows the country is more willing to try these brands. With more investment into these brands from retailers, this trend is set to continue into 2018.

NO LONGER THE POORER COUSIN

- Advertisement -

It’s therefore clear that PL products are no longer the poorer cousin of retail – they’re well researched, manufactured, and packaged. They reflect consumers’ appetite for PL brands, catering to their requirement of reasonably priced but quality products, offering a wide range similar to branded products.

The study shows that consumer perception around the quality and value of PL products is improving driven by increased innovation and differentiation in the category as compared to a few years ago.

SHIFTING SHOPPING

Overall, the biggest incremental gains have occurred in food categories, with staples showing high-value growth, which has been driven through inflation, but again showing that consumers are willing to switch to PL for their staple requirements.

Looking at specific product types, long-life milk has passed individually quick frozen (IQF) chicken as the biggest PL category in terms of rand value sales. IQF chicken was subject to new bringing legislation passed in October 2016, which saw an initial negative impact in the category as existing items were phased out – it also had an upward effect on inflation.

Read Also:  Nigerians paid more for Kerosene and Cooking Gas in December – NBS
- Advertisement -

In terms of the categories that have shown the most sales and growth, it’s clear, however, that PL is no longer only about commodity items like long life milk and chicken. In line with this the study found that in terms of PL purchase drivers, quality and value drivers are more favourable, with 38% (versus 27% in 2014) consumers stating that PL products offer good value for money while 37% (versus 31% in 2014) say the quality of these types of products is improving.

This means that despite 69.9% of PL sales still coming from groceries and perishables, the category is making rapid in-roads into smaller categories like confectionery as well as baby and personal care. Baby care has achieved 28.7% annual value growth versus 5.7% in the branded sector and personal care 12.4% versus 6.7% in the branded sector.

MOVERS AND SHAKERS

One of the biggest movers within PL product categories in 2017 is frozen prepared meals, which now fall in the top 10 PL categories, with sales of R1.3bn and 25% annual value growth. Part of this stems from a focus by major retail chains on creating quality offerings for singles, couples, and small families and tapping into time-starved nature of consumers’ modern-day lives and their need for convenience. There has therefore been a lot of activity within this category in the last year.

Read Also:  CNN is Subscribing to Nielsen’s Out-of-Home Audience Measurement Service

Commodity categories allow for little differentiation in terms of quality and branding but other categories where there is room for value-add are a new place for PL, and frozen prepared meals fall perfectly in line with this. Along with cuts in budgets and going out also becoming a luxury, the move of frozen prepared meals to second on the rank of top PL categories, therefore, comes as no surprise.

- Advertisement -

THE RISE OF THE PRIVATE - LABEL RETAIL CATEGORY IN SOUTH AFRICA

The market is ripe for retailers to invest in their PL products, and ensure that there are quality options available across key categories for consumers. Providing variety within categories is also important. Retailers need to focus on consumers’ needs and meet them to succeed in the PL game. There’s increasing willingness from consumers to try these PL products, and if retailers can tap into this demand, PL share can expect to see growth in 2018 and beyond.

For additional information on Nielsen’s State of PL in South Africa report, click here.

*LSM=Living Standards Measure – a unique means of segmenting the South African market by grouping people according to their living standards using criteria such as the degree of urbanization and ownership of cars and major appliances.

- Advertisement -
THE RISE OF THE PRIVATE - LABEL RETAIL CATEGORY IN SOUTH AFRICATHE RISE OF THE PRIVATE - LABEL RETAIL CATEGORY IN SOUTH AFRICA

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

THE RISE OF THE PRIVATE - LABEL RETAIL CATEGORY IN SOUTH AFRICATHE RISE OF THE PRIVATE - LABEL RETAIL CATEGORY IN SOUTH AFRICA

Latest News

Deloitte Ranked No. 1 Consulting Service Provider Worldwide By Revenue According To Gartner

Deloitte has been ranked No. 1 by revenue according to Gartner, the world’s leading information technology and advisory company,...

Hyundai Motor and Sony Pictures Entertainment Announce Unique and Pioneering Multi-Picture Promotional Partnership

Hyundai Motor Company and Sony Pictures Entertainment today announced they have entered into a unique and unprecedented multi-picture promotional partnership that will feature the automaker’s new models and technologies in upcoming...

Working From Home: 8 Tips For Getting It Done

Most of us are well into the working from home routine and have adjusted to different spaces, pets and children on work calls, and...

Great Hit Songs from the Partnership of Rock & Hip-Hop Music

There is nothing impossible, Getting a hit song from Rock and Hip-hop can be quite challenging looking at the set-up of their respective genres....

Southco Releases New Display Mount Series Designed for Static Applications

HONG KONG, CHINA - Media OutReach - 28 May 2020 - Southco Asia Ltd., a subsidiary of Southco Inc., a leading global provider of engineered access solutions such as...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -THE RISE OF THE PRIVATE - LABEL RETAIL CATEGORY IN SOUTH AFRICATHE RISE OF THE PRIVATE - LABEL RETAIL CATEGORY IN SOUTH AFRICA