While they may purchase them, a majority of South African consumers say they are not loyal to store brands or private label products, a Nielsen study showed Monday, 24 November 2014.
The risk of buying cheaper products is too big for consumers to take as rising costs‚ a slowdown in income growth and increasing debt weigh on household expenditure, making every cent count.
Price-driven local shoppers are looking to economise but there is an increasing tendency to rely on the reputational strength and goodwill of a branded product.
According to Nielsen, a global marketing research firm, 70% of consumers in SA prefer to see name-brand and store-brand items next to each other on the shelf so they can easily compare prices.
Private labels, also known as house or store brands, in SA are often perceived as being a no-frills, lower-cost alternative.
Independent retail analyst Syd Vianello said there was a view among most local consumers that private labels were inferior.
"I'm not entirely sure that it's going to take off like mad here because there's no uniformity - consumers are confused because private label is pitched both at the top end and the bottom end of the spectrum," he said.
A boon for retailers‚ private label products generate higher average price margins as they require lower research and development costs and reduced packaging costs.
"About 72% of consumers only buy store brand products from retailers they trust," Nielsen said. Woolworths' food catalogue is made up primarily of private label goods. Shoprite's private label offering includes an economy product called Ritebrand in Shoprite and Housebrand in Checkers, and other private label products or quasi-brands pitched as brand-leader equivalents.
Nielsen said the value share of private labels is at or above 15% in developed regions, and as high as 45% in Europe but below 10% in most developing countries. In SA, private labels represent 18% of the value of sales.
Source: Business Day
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