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, 25 May 2017 04:50:48 GMT)


Seven Steps to Building a Private Label or Contract Manufacturing Partnership - Natural Products INSIDER
Published: May 24th, 2017


Natural Products INSIDER

Seven Steps to Building a Private Label or Contract Manufacturing Partnership
Natural Products INSIDER
Although not everyone agrees on the definitions, private label suppliers typically offer an off-the-peg formulation that is ready to be sold under a brand's label. Contract manufacturers tend to work with clients to develop a unique product, often ...

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Oil-Dri Announces Price Increase on Private Label Heavy Cat Litters ... - Nasdaq
Published: May 24th, 2017


Oil-Dri Announces Price Increase on Private Label Heavy Cat Litters ...
Nasdaq
CHICAGO, May 24, 2017-- Oil-Dri Corporation of America announced today that it will be implementing price increases on its private label heavy.

and more »

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France's Système U To Scrap Private Label Line 'Bien Vu' - ESM - The European Supermarket Magazine
Published: May 22nd, 2017


ESM - The European Supermarket Magazine

France's Système U To Scrap Private Label Line 'Bien Vu'
ESM - The European Supermarket Magazine
French retailer Système U is to scrap its premium private label line Bien Vu as a result of falling sales figures, Linéaires has reported. The SKUs that appear under the line at present will be sold under the grocer's more generic brand Madrange. Among ...

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Amazon claims local trademarks for private label range AmazonBasics: Will your business be affected? - SmartCompany.com.au
Published: May 22nd, 2017


SmartCompany.com.au

Amazon claims local trademarks for private label range AmazonBasics: Will your business be affected?
SmartCompany.com.au
Retailing giant Amazon has snapped up a series of Australian trademarks related its private label brand AmazonBasics, which experts believe could put the pressure on a number of Australian retailers. The company lodged four trademark applications last ...
Amazon moves to trademark its private label brand in AustraliaNEWS.com.au
Amazon buys trademarks to prepare for Australian arrivalThe Australian

all 8 news articles »

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Sprouts bullish on private label strength - Supermarket News
Published: May 19th, 2017


Supermarket News

Sprouts bullish on private label strength
Supermarket News
Despite a unique balance that sees 60% of purchases come from the perishable side, predominately non-perishable private label offerings have become key revenue drivers for of Sprouts Farmers Markets, officials said. “We started private label about four ...

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Private label on the road to permanent sophistication - Retail Detail Europe
Published: May 18th, 2017


Retail Detail Europe

Private label on the road to permanent sophistication
Retail Detail Europe
Looking at the sheer amount of companies exhibiting at the 2017 PLMA Trade Show in Amsterdam, private label must be thriving in Europe. Most notably, private label has shed its price image (partly) and more sophisticated concepts have been launched.

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Private Label VR Enters The Wild West Of Virtual Reality Gaming - Benzinga
Published: May 13th, 2017


Benzinga

Private Label VR Enters The Wild West Of Virtual Reality Gaming
Benzinga
Advancements in technology are turbocharging development in the virtual reality space — and one young company is taking advantage of a market that didn't previously exist. Salem, Utah-based Private Label VR, which started business in January, offers ...

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They're back: Wells Fargo prepares to issue private-label mortgage bonds - HousingWire
Published: May 12th, 2017


HousingWire

They're back: Wells Fargo prepares to issue private-label mortgage bonds
HousingWire
Before the financial crisis, Wells Fargo packaged over $1 trillion of mortgages into private label securitizations, however since the crisis, investors lost interest as large volumes of risky loans went bad, the article states. Indeed, this chart from ...

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Private Label, Price Hikes Drive Sales in Europe - Olive Oil Times
Published: May 11th, 2017


Private Label, Price Hikes Drive Sales in Europe
Olive Oil Times
Private label olive oil is any olive oil that has been manufactured by a third party and then sold under a retailer's brand name, and private label olive oil sales (and discount channel brands) have risen in prominence across the major European ...

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New pricing program, private-label goods part of major commissary overhaul - Military Times
Published: May 4th, 2017


Military Times

New pricing program, private-label goods part of major commissary overhaul
Military Times
Early results from widespread commissary pricing changes have shown little effect on shoppers' savings, a commissary official said, but some items could become more expensive thanks to greater price flexibility -- and the extra cash may not be going ...

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