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.

 

Back to the Top

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.

 

Back to the Top

(Updated: Mon, 24 Apr 2017 03:22:24 GMT)


Growth in private store brands poised to accelerate through 2022 - Food Dive
Published: April 21st, 2017


Growth in private store brands poised to accelerate through 2022
Food Dive
Kantar Retail grocery analyst Diana Sheehan predicts during the next five years private label sales will outperform the previous five, according to Store Brands. The main drivers, she noted, will be increasing demand from millennial shoppers and from ...

Click for full story



Amazon trials private label lingerie brand in UK - Drapers
Published: April 21st, 2017


Drapers

Amazon trials private label lingerie brand in UK
Drapers
In February, Drapers revealed that Amazon has poached senior design and buying experts from Marks & Spencer and Primark for its own-label rollout. Meanwhile, earlier this week, Amazon was awarded a US patent for an on-demand clothing manufacturing ...

Click for full story



Why Sam's Club is concentrating on private label products - Food Dive
Published: April 20th, 2017


Food Business News (registration)

Why Sam's Club is concentrating on private label products
Food Dive
Sam's Club, the membership warehouse club division of Wal-Mart, has upgraded its Member's Mark private label brand by offering hand-picked ingredients and premium products across both its food and general merchandise categories, according to Food ...
Sam's Club revamps private label brandFood Business News (registration)
Sam's Club Is Rolling Out Vino For The MassesRefinery29
Sam's Club shows off brand redoArkansas Online
Forbes -Food & Wine
all 25 news articles »

Click for full story



Fernhill Beverage Enters the Private Label Market - Yahoo Finance
Published: April 18th, 2017


Yahoo Finance

Fernhill Beverage Enters the Private Label Market
Yahoo Finance
The Company expects the Private Label Program to more than double Ferhills already fast growing revenue numbers. More details will be announced as they develop. Fernhill Beverage, Inc. will be actively pursuing all opportunities to grow the brands ...

Click for full story



Supervalu plans to retain Unified private labels: CEO - Supermarket News
Published: April 17th, 2017


Supervalu plans to retain Unified private labels: CEO
Supermarket News
Supervalu plans to continue offering Unified Grocers' private brands to Unified's customers upon completion of their planned merger, Supervalu President and CEO Mark Gross said. “Our goal, every step of the way, will be to provide products and services ...

Click for full story



LenderLive completes takeover of PHH private-label business - Mortgage Professional America
Published: April 13th, 2017


Mortgage Professional America

LenderLive completes takeover of PHH private-label business
Mortgage Professional America
While it is true that a timeshare contract is a binding legal document, it is often mistakenly thought that such a contract cannot only be cancelled. In fact, most timeshare companies maintain that their contracts are non – cancellable. This ...

Click for full story



Private label manufacturers prefer to work with Aldi and Lidl - Retail Detail Europe
Published: April 13th, 2017


Retail Detail Europe

Private label manufacturers prefer to work with Aldi and Lidl
Retail Detail Europe
Private label manufacturers encounter plenty of cost-increasing obstacles when they collaborate with retailers, but their partnerships with hard discounters are much more efficient. What can we learn from that?

Click for full story



Plumb's Foods rebrands, adds AWG private label - Supermarket News
Published: April 12th, 2017


Supermarket News

Plumb's Foods rebrands, adds AWG private label
Supermarket News
The former Plumb's Valu-Rite Foods chain in Michigan has begun converting its stores to the Great Lakes Fresh Market banner and is adding the Best Choice and Always Save private labels from Associated Wholesale Grocers. The three-store chain, which ...

Click for full story



PHH Officially Exits Private Label Fulfillment - theMReport.com - The MReport
Published: April 10th, 2017


The MReport

PHH Officially Exits Private Label Fulfillment - theMReport.com
The MReport
On Monday, LenderLive Network LLC, a mortgage services provider, announced that it has completed its transaction with PHH Mortgage Corporation.
LenderLive officially takes over PHH private-label mortgage ...HousingWire

all 2 news articles »

Click for full story



Smucker, Stuck Between Wal-Mart And Private Labels, Is A Sell - Barron's (blog)
Published: April 10th, 2017


Barron's (blog)

Smucker, Stuck Between Wal-Mart And Private Labels, Is A Sell
Barron's (blog)
J.M. Smucker (SJM) is falling Monday, after Morgan Stanley's Matthew Grainger and his team cut their rating on the stock, citing pricing pressures from Wal-Mart (WMT) and growing competition from private-labels. Getty Images. Grainger slash Smucker to ...

and more »

Click for full story