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Own Brands Market Report 2007
Key Note Publications Ltd, Oct 2007
This Market Report covers the UK market for own-brand products. In particular, it focuses on own brands in the following sectors: groceries; clothing and footwear; do-it-yourself (DIY) products; cosmetic and toiletries; and over-the-counter (OTC) medicines.
We estimate that, in 2006, the total value of own-brand sales was £72.1bn. This represents an increase of 18% over the review period (2002 to 2006), which is almost twice the rate at which total retail sales increased over the same period (9.5%).
Growth rates within the market reflect both the growing popularity of own-brand goods among consumers and the increased range of goods now widely available. No longer found only in the low-cost grocery sector — the birthplace of the own-brand market — goods now span a diverse range of markets and are bought by an equally diverse range of consumer lifestyle groups. Grocery ranges have moved from `no-frills', basic items to premium goods with highly targeted customer segments. Own-brand goods have expanded heavily into the non-food sector, with the sectors covered by this growth having demonstrated the most significant development.
Supermarkets Tesco and ASDA are both capitalising on the growth of own-brand non-food goods, especially in the clothing sector, where these two retailers are now among the top three clothing retailers in the UK. With a steady flow of cheap imports from China and the Far East, supermarkets and retail groups such as Primark can continue to offer low-cost own-brand clothing and other non-food items, in their bids to expand their own-brand portfolios.
The growth in own brands has shifted the power in the retail supply structure to the retailer, instead of the brand owner. Retailers now control category price setting and are more adept at promoting their own goods in store. By offering their own brand labels they can reap higher profit margins and, with the huge quantities they purchase, they can bargain hard with their suppliers.
The own-brand market appears to be highly resilient to economic changes, so the outlook appears very positive. Over the 5 years to 2011, sales are forecast to rise ahead of inflation, as retailers continue to diversify into new areas and consumers become more accustomed to purchasing own-brand goods.
Should economic conditions in the UK worsen, it is likely that a strategy of more basic own-brand products would succeed; should conditions improve, a move to more premium products would be in order.
As consumers become ever more accepting of own-brand goods, they will naturally be developed in new and emerging markets. In 2007, Marks and Spencer and Tesco were moving into electrical-goods markets, such as televisions and computers. With Tesco ready to take on the likes of Microsoft with some of its new own-brand software products, it seems that no multinational brand can escape the effect of own branding.
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