Post on 29-Apr-2023
1FEATURED INSIGHTS | WHAT MAKES PRIVATE LABELS CLICK? Copyright © 2013 The Nielsen Company
1
F E AT U R E D I N S I G H T S
W H AT M A K E S P R I VAT E L A B E L S C L I C K ?UNDERSTANDING SHOPPER ATTITUDES & PERCEPTIONS TOWARDS PRIVATE L ABELS
BY: ADRIAN TERRON
• IF ALL PRIVATE LABELS WERE CLUBBED TOGETHER, THEY WOULD EQUAL THE THIRD-LARGEST FMCG SUPPLIER TO MODERN TRADE IN INDIA
• SHOPPERS ARE BECOMING INCREASINGLY EXPERIMENTAL IN THEIR BRAND CHOICES
• FOOD AS A CATEGORY ACCOUNTS FOR THREE-FOURTH OF TOTAL SALES IN PRIVATE LABEL
• PRIVATE LABEL PRODUCTS GIVE SHOPPERS THE REASSURANCE THAT THEIR RETAILER IS ACCOUNTABLE FOR QUALITY
While India’s retail industry continues to scale new heights each year,
the private-label area in FMCG has shown incredible consistency and
potential. In fact, Nielsen estimates that India’s private-label market will
grow fivefold to reach the USD half billion mark by 2015. With a projection
like that, India’s private label sector is better poised than its counterparts
in other emerging economies. It also highlights shifting attitudes and
perceptions with respect to brand loyalty.
DELIVERING CONSUMER CLARITY
2 FEATURED INSIGHTS | WHAT MAKES PRIVATE LABELS CLICK?
PRIVATE LABEL SHARE IN MODERN TRADE
FOOD DOMINATES INDIA’S PRIVATE LABEL MARKET
Food category alone accounts for 76 percent of the total sales in private
label, and within this, some areas are making bigger waves than others.
Packaged grocery, for example, has a particularly dominant position,
as it pulls in a whopping 53 percent of total sales. The hot beverage
category has an 8 percent allocation and is another segment worth
watching.
Source: Nielsen
MAT Dec ‘12Source: Nielsen
CHINA INDONESIA THAILAND
0.8% 1.7% 3.3%5%
6.8%8.6%
13.6%
24.5%
INDIA HONG KONG SINGAPORE NEWZEALAND
AUSTRALIA
15%
20%
8%5%
52%
COOKING MEDIUM
OTHER FOOD PRODUCTS
HOT BEVERAGES
IMPULSE FOOD PRODUCT
PACKAGED GROCERY
3FEATURED INSIGHTS | WHAT MAKES PRIVATE LABELS CLICK? Copyright © 2013 The Nielsen Company
PRIVATE LABEL GROWTH HIGHER THAN MODERN TRADE GROWTH
While segments within the foods category like packaged rice, packaged
atta and pure ghee have garnered the highest value sales, a few private-
label segments are generating sales that are stronger than their modern
trade equivalents.
In the non-food category, household cleaners hold the numero uno
position, accounting for nearly half (48%) of the private-label sales.
Personal care, fabric care and the general category are other segments
which contribute significantly to non-food.
Source: Nielsen
“FOR MOST OF THE CATEGORIES, GROWTH IN PRIVATE LABEL IS HIGHER THAN THE GROWTH WITNESSED IN MODERN TRADE.”
PACKAGED TEA
REFINEDEDIBLE OILS
BISCUITS
PL CONTRIBUTION IN CATEGORY MT SALES
PL V
ALU
E O
FFTA
KE IN
RS.
MN
PL VALUE GROWTH (MAT DEC ’12 OVER MAT DEC ’11)
MT VALUE GROWTH (MAT DEC ’12 OVER MAT DEC ’11)
BREAKFASTCEREALS
KETCHUPS ANDSAUCES
377
231
181
129
83
7% 46% 22%
2% 420% 25%
2% 64% 26%
8% 55% 22%
3% 41% 23%
4 FEATURED INSIGHTS | WHAT MAKES PRIVATE LABELS CLICK?
WHAT’S DRIVING THE CHANGE?
To identify what drives the private-label market, it’s crucial to understand
the characteristics of the modern shopper. With growing levels of
disposable income, shoppers are far more open to experimentation
than ever before. With the rise of modern trade, the perceptions about
grocery shopping have changed. Rather than viewing shopping as a
chore, more and more Indians are finding it to be a more pleasurable
experience.
THE NEW GENERATION OF SHOPPERS IS LESS LOYAL TO BRANDS THAN BEFORE AND QUITE OPEN TO TRYING NEW PRODUCTS.
The format has also triggered the transformation of the shopping
experience from being a necessity to becoming a sensorial experience
with less dependence on planning and a fixed list of brands. Interestingly,
we find that consumers sometimes choose private labels in certain
categories because of the assurance they get from knowing that they
can interact directly with the retailer during their shopping trip.
Source: Nielsen
In terms of category contribution in the non-food category, floor
cleaners, tissue papers and toilet cleaners occupy the top three spots
with 24 percent, 28 percent and 16 percent of sales, respectively.
3% 11%
19%
47%
17%
3%
BABY CARE PRODUCTS
FABRIC CARE
GENERAL
HOUSEHOLD CLEANING
PERSONAL CARE - GENERAL
PERSONAL CARE - WOMEN
5FEATURED INSIGHTS | WHAT MAKES PRIVATE LABELS CLICK? Copyright © 2013 The Nielsen Company
NOT ALL CATEGORIES HAVE ACHIEVED PRIVATE LABEL SUCCESS
In spite of the robust growth in the private-label market, certain
categories have yet to make successful inroads. For example, baby
care and baby foods products have been less successful. Retailers can
help overcome the challenges that certain product categories face by
enhancing in-store awareness, increasing visibility and providing value
for money options.
As private labels gain traction, national brands need to focus more
on differentiating their products to prevent shoppers from switching.
Considering the steady growth rate of private labels through modern
trade, it looks as though India’s fast-moving consumer goods market
will continue to diversify with increasing levels of private label and
national brand products on offer.
OVERCOMING CHALLENGES
• ENHANCE IN-STORE AWARENESS
• INCREASE VISIBILITY OF PRIVATE LABEL PRODUCTS
• HIGHLIGHT VALUE- FOR-MONEY ASPECT
THE NIELSEN QUALITATIVE VIEWREDEFINING ‘VALUE’ – FROM PRICE DIFFERENTIAL TO BRAND DIFFERENTIATION
SARBANI SEN, ASSOCIATE DIRECTOR, NIELSEN INDIA
• Private label brands have introduced another axis of ‘value alternative’ in the consumer’s mind tempting them to relook the perceived ‘price - quality’ equation during their shopping trips.
• With shoppers looking to trim their shopping bills & hence look at Value for Money (VFM) options, private labels cater to a segment which wants to participate in the modern trade experience but is not as brand savvy. This is the key reason private labels stand to gain.
• Having managed to intersect & peg itself in the shopper’s consideration set, they are redefining value by now signalling better quality, convenience, service, experience & innovation.
• While most players begin by suitably identifying the pricing sweet spot, as the market for private labels expand, it will become more sophisticated with retailers using their own private labels as a means of brand differentiation.
• This allows retailers to cater to multiple shopper segments rather than the generic ‘value conscious’ mindset which is not besotted by big brands or drawn to a more homely private label counterpart merely by virtue of price.
• As shopper loyalty becomes increasingly ‘episodic’ and event-based, private labels are here to make inroads in an increasingly unobtrusive fashion and are likely to continue positioning themselves as a natural alternative in the categories they are present.
6 FEATURED INSIGHTS | WHAT MAKES PRIVATE LABELS CLICK? Copyright © 2013 The Nielsen Company
NIELSEN ESTIMATES THAT INDIA’S PRIVATE LABEL MARKET WILL GROW FIVEFOLD TO REACH THE USD HALF BILLION MARK BY 2015
7FEATURED INSIGHTS | WHAT MAKES PRIVATE LABELS CLICK? Copyright © 2013 The Nielsen Company
ABOUT NIELSEN Nielsen Holdings N.V. (NYSE: NLSN) is a global information and
measurement company with leading market positions in marketing
and consumer information, television and other media measurement,
online intelligence, mobile measurement, trade shows and related
properties. Nielsen has a presence in approximately 100 countries,
with headquarters in New York, USA and Diemen, the Netherlands.
For more information, visit www.nielsen.com.
Copyright © 2013 The Nielsen Company. All rights reserved. Nielsen
and the Nielsen logo are trademarks or registered trademarks of
CZT/ACN Trademarks, L.L.C. Other product and service names are
trademarks or registered trademarks of their respective companies.
ADRIAN TERRON
EXECUTIVE DIRECTOR
NIELSEN INDIA
ABOUT THE AUTHOR
Deepak Pillai and Modhurima Maiti from the Nielsen Retail & Shopper team
were instrumental in the creation of this issue of Featured Insights.