What’s New In Private Label

Please find following news feeds from around both locally & the globe highlighting the latest trends and insights into Private Label development.

 

25th August 2016

PLMA International – Global Insights Update – August 2016

Please click this link for PLMA International’s August 2016 update

 

25th August 2016

Coles to cut product range by 15 per cent- Herald Sun

CUSTOMERS can expect Coles’ shelves to look very different over the next two years as its product range goes Down, Down.

Speaking to analysts during Wesfarmers annual results briefing on Wednesday, Coles managing director John Durkan said the supermarket would cut the number of products on its shelves by 10 to 15 per cent over the next two to three years.

But the actual number of items removed may be much higher, as Coles continues to replace branded products with its own-brand versions.

“You should expect over the next two to three years we’ll take our SKUs [stock keeping units] down somewhere from 10 to 15 per cent net,” Mr Durkan said.

“We’ll be bringing new SKUs into the business, both Coles brand and branded, therefore removing the tail of the underperforming SKUs.”

Mr Durkan said reduction in product lines to date had been crucial for delivering efficiency and productivity gains throughout the supply chain.

“But of course we have to do it in the right, customer-facing way,” he said. “We’ll do it very carefully, category by category, on a store-by-store basis.”

Mr Durkan pointed out that the savings were used to continue lowering prices on those products kept on the shelves.

“As I’ve been saying for a while now, our investment in terms of value is really going to be funded by all of the efficiencies and productivities we see come out of the business,” he said.

“I still see many opportunities to become more productive and efficient in the business, across the end-to-end supply chain. A lot of it is rationalising our range size to bring that down. That brings a whole lot of efficiencies to every part of our supply chain.”

Speaking to media following the briefing, Wesfarmers boss Richard Goyder said the 10 to 15 per cent reduction target had been in place since Terry Bowen had been Wesfarmers’ finance director.

“Every additional SKU you put through your supply chain creates complexity and therefore creates a cost,” Mr Goyder said.

“I’d still argue you can go into a Coles and find too many options in some product ranges and we’re working our way through that because we want our customers to come with us.

“We don’t want to do what Coles did prior to the acquisition, which is to just unilaterally take products off the shelf — that gets customers off-side. That’s why it takes a bit longer but as a consequence we’ll be more efficient.”

Private labels currently make up about one quarter of all supermarket sales, according to market research firm IBISWorld, and that is projected to grow to 28 per cent by 2021-22.

Coles does not reveal internal breakdowns of the proportion of private label to branded products, and a spokesman wouldn’t say whether the supermarket intends to increase that figure.

Coles stocks around 25,000 products, compared with around 2000 at discount rival Aldi. According to market research firm IRI, private label brands were a key driver of Coles growth last year, even drawing customers away from Aldi.

Earlier this year, Canstar revealed customers were warming to Coles private label brands in a way they never had before, with Coles’ own brands taking top spots in long-life milk, toilet paper and dishwasher detergents.

Coles’ full-year earnings rose 4.3 per cent to $1.86 billion with food and liquor sales increasing 5.1 per cent to $32.6 billion, and the crucial comparable sales growth lifted 4.1 per cent.

Prices fell by 2.4 per cent in the last quarter of the financial year — Coles’ strongest price deflation in 11 quarters — working out to $192 million in lower prices.

If Woolworths underperforms when it presents its annual results on Thursday, it will represent the 28th straight quarter the nation’s biggest supermarket has been beaten by Coles.

Today’s result marks 33 straight quarters of comparable sales growth for Coles, going all the way back to the takeover by Wesfarmers in 2007.

 

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25th August 2016

Woolworths’ billion-dollar loss a symptom of a sector in turmoil- Planet Retail

After a less-than-stellar showing by main rival Coles yesterday, Woolworths’ FY results spelled out starkly the problems besetting Australia’s leading grocers. The company posted an AUD1.23 billion loss as price cuts ate into margins and better-performing competitors continued to eat into its market share.

PLANET RETAIL’S VIEW
  • The results this week from both Coles and Woolworths reveals the extent of disruption Aldi has caused in Australian grocery. The big question now is whether the Big Two continue to fight back on price – at considerable cost – or accept that the landscape has changed for good. At the back of their mind must be the thought that, should they succumb, it might encourage further overseas players to venture into the market – Lidl being the elephant in the room here.
  • We anticipate further shedding of non-core businesses as Woolworths ploughs all its funding into its key food and liquor proposition. New channels may need to be explored – such as convenience and online – which will require funding with no guarantee of ROI.
  • Woolworths has managed to maintain NPD and continues to innovate around private label. It has also moved early to offer its brands via cross-border channels like Alibaba’s Tmall. If it is to enjoy a better future, we believe private label will be a major factor in improving its margins going forward.

Despite Woolworths recording its first-ever annual loss as a listed entity, CEO Brad Banducci stated that the business is making strides in its efforts to reconnect with Australian shoppers. In particular, he highlighted improved same-store food sales in Q4. While these were still down 1.1%, it was a slight improvement on the declines recorded in previous quarters. He added that same-store sales had actually tipped over into positive territory in the eight weeks to 21 July, showing a 0.8% gain.

Woolworths has set great store by listening to its shoppers and its learnings have seen it working hard to transform its stores, with a special emphasis on improving its fresh produce offer. Another move, announced this week, has been an overhaul of what was widely perceived as a badly-conceived loyalty scheme.

It has been price competitiveness, though, that has had the biggest impact on performance. As Coles discovered, discounts and promotions take a heavy toll on overall performance and the question remains as to how long this can be sustained.

Keeping the customers is imperative

In the meantime, Woolworths is working hard at improving customer services and has claimed a degree of success with its initiatives so far. It flagged steadily improving customer satisfaction ratings during the year, peaking at 77% in June. Team Attitude and Time In Queue delivered the best scores, the company stated, but Availability and Fruit & Veg were areas that were still in need of work.

These metrics will be significant going forward, as Woolworths’ massive investments in price will count for little if they cannot retain customers once this period of discounting passes. And that does seem likely eventually, as the business surely will not be able to sustain discounts indefinitely. For the full year, Woolworths reduced average prices by 2.3%, with a 2.7% reduction in Q4. The company claimed it had invested in excess of AUD500 million in prices during the year.

Reconfiguring for a new climate

It goes without saying that this has been inspired by Aldi’s seemingly unstoppable growth in the Australian market, with the discounter predicted to secure market share of 20% within a few years. While price investments have been one means of securing margins, we have also seen Woolworths make other moves to trim the fat from its operations, notably its exit this week from its disastrous foray into the DIY business with Masters and the Home Timber & Hardware banners, operations that have been nothing but a drag on the company’s overall performance.

Likewise, the future of the BIG W discount variety chain must also be in doubt. Woolworths claims it still sees a future for the banner, but given the losses piled up this year, the feeling must surely be that a disposal would bring in much-needed resources for the bigger fight ahead. In recent months we have heard rumours of potential interest from serial M&A bandits Steinhoff International. Were the price right, it may be enough for Woolworths to consider offloading the business.

Capital will undoubtedly be needed in the short-term as Banducci will likely come under a degree of pressure from shareholders to hasten up the turnaround. The CEO has said the transformation process will take anything up to five years to be completed. Investor patience rarely lasts that long.

 

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(Updated: Thu, 19 Oct 2017 12:42:05 GMT)


Kagan: Will Walmart win with Jet.com private label? - Retail Customer Experience (blog)
Published: October 18th, 2017


Retail Customer Experience (blog)

Kagan: Will Walmart win with Jet.com private label?
Retail Customer Experience (blog)
Walmart acquired Jet.com and is now getting ready to launch its own private label branded items. This is their attempt to better compete with Amazon.com. However, I have a very important idea to help them win going forward. Something they haven't ...

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Hiscox Re Offers Private Label Flood Insurance Endorsement for US Insurers - Insurance Journal
Published: October 16th, 2017


Insurance Journal

Hiscox Re Offers Private Label Flood Insurance Endorsement for US Insurers
Insurance Journal
The turnkey flood insurance product, named FloodXtra, is designed to take advantage of the insurance gap once again made obvious by recent hurricanes Harvey, Irma and Maria in the U.S. and the potential for private market sales if Congress reforms the ...

and more »

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Amazon's Reported Push Into Private-Label Sportswear Rattles ... - Investor's Business Daily
Published: October 13th, 2017


Investor's Business Daily

Amazon's Reported Push Into Private-Label Sportswear Rattles ...
Investor's Business Daily
Given that Amazon has 19 private-label apparel brands, many of them still in their embryonic stages, it might come as no surprise that the e-commerce dragon is.
Amazon Is Getting Into Sportswear - BloombergBloomberg

all 9 news articles »

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Private labels evolve with consumer, competitive trends - Supermarket News
Published: October 13th, 2017


Supermarket News

Private labels evolve with consumer, competitive trends
Supermarket News
As more and more mainstream CPG brands find themselves falling out of favor with consumers, it has opened the door for local and niche brands to grow. Slipping in the door alongside them is an increasing variety of specialty private label brands that ...

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As Power Of Name Brands Wanes, CVS Is Betting On Private Labels To Revive Sales - Forbes
Published: October 12th, 2017


Forbes

As Power Of Name Brands Wanes, CVS Is Betting On Private Labels To Revive Sales
Forbes
CVS is looking to its private labels to differentiate its merchandise from what's currently on the market with “premium, innovative products without the premium prices,” said Cia Tucci, vice president of store brands and quality assurance for the 9,600 ...

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Amazon Private Labels May Add $1B: Morgan Stanley | Investopedia - Investopedia (blog)
Published: October 11th, 2017


PYMNTS.com

Amazon Private Labels May Add $1B: Morgan Stanley | Investopedia
Investopedia (blog)
Private label is likely the next major driver of Amazon profits, and its growth is just beginning.
Morgan Stanley Analyst Says Amazon Private Labels Can Boost Bottom LinesPYMNTS.com

all 6 news articles »

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GEORGE BALLING: Private label good or bad? - Coeur d'Alene Press
Published: October 11th, 2017


GEORGE BALLING: Private label good or bad?
Coeur d'Alene Press
The big outfits pursuing this private label model do all they can to hide it from the consumer, to make the brand look like a real winery. Recently two major grocery store chains that serve the North Idaho market have moved to make fully 70 percent of ...

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Report: Amazon's private brands could add $1 billion in gross profit ... - Markets Insider
Published: October 10th, 2017


Markets Insider

Report: Amazon's private brands could add $1 billion in gross profit ...
Markets Insider
Amazon's nascent effort to sell products that carry its own brands could give its business a huge windfall. The e-commerce giant offers everything from burgers to ...
Amazon Can Get $1B Boost to Bottom Line, Says Morgan Stanley ...Barron's
Amazon.com Inc tipped to grow private label brands into billion ...Proactive Investors UK

all 3 news articles »

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Jet.com is targeting millennials customers with edgy and fun new private-label brands. Will it work? - Motley Fool
Published: October 7th, 2017


Los Angeles Times

Jet.com is targeting millennials customers with edgy and fun new private-label brands. Will it work?
Motley Fool
Jet.com has confirmed to The Motley Fool that over the next few months, it will launch a private-label brand, called Uniquely J, "a brand designed for metro millennial consumers." This will allow the e-commerce site to compete with Amazon on price for ...
Wal-mart Stores, Inc. - WMT - Stock Price Today - ZacksZacks Investment Research

all 575 news articles »

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Amazon's private label sales could hit $4.3 billion when including Whole Foods, analyst says - CNBC
Published: October 2nd, 2017


CNBC

Amazon's private label sales could hit $4.3 billion when including Whole Foods, analyst says
CNBC
Amazon's sales from private label products could hit $4.3 billion when including Whole Foods, SunTrust Robinson Humphrey's Youssef Squali wrote in a note Monday. Amazon already has 27 private label brands, including the Echo, AmazonBasics, and a ...

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