Spanish brands compete with private label through aggressive pricing
11 May 2015
Private label growth in Spain is set to slow down as branded manufactures respond with aggressive pricing and promotional strategies. Canadean investigates how store own brands can make their products stand out on the shelf.
Although the economy in Spain is steadily recovering, seven out of ten Spanish consumers are not feeling confident about the current state of the economy, according to a new survey by Canadean. These feelings of uncertainly and insecurity have led Spanish consumers to look for affordable food and drink products that help them save money. The trend of ‘better value for money’ has been dominating the market in recent years and has created a habit of thrifty spending. Even now, as many consumers have more stable jobs and a better income, they still want to spend wisely.
According to Canadean, private label sales have grown over the past few years. However, this growth will begin to slow as branded manufacturers respond with increased promotional offers. Only one third of Spanish consumers are planning to buy more private label products in the coming year, as price-oriented consumers seek out branded products on promotional offer. The survey finds that 57% of Spaniards look for promotions and discounts, while 49% use vouchers and coupons and 38% use websites to compare different prices at supermarkets. Brands are positioning their goods around affordability and are increasing the number of reductions and sales. Raquel Perez-Lopez, analyst at Canadean, says: “As a consequence, both private and branded manufacturers will suffer due to aggressive discounting. This will not just erode premium credentials of brands, but also mean that consumers focus too much on price and promotion and do not evaluate other product attributes such as health and convenience.”
Private label manufacturers need to emphasise premium credentials
Promotional branded products and store own brands are often offered at the same price in supermarkets. However, consumers will fall back on known products as they believe that branded products are of better quality. “Private label manufacturers should promote the quality of their goods via clear labelling that states the origin of the product along with the production method. This will encourage consumers to think twice about what product to buy,” adds Perez-Lopez. “Unbranded food and drink products need to stand out on the shelf in order to compete with branded products.”
Brands are set to implement aggressive pricing strategies to respond to private label's success.
All numbers used in this text are based on a Canadean survey of 2,000 Spain based consumers.
Please get in contact if you have any questions to this or other Canadean surveys. Analysts are available to comment. Contact the Canadean press office on +44 (0) 207 936 6536 or email firstname.lastname@example.org.