Premium private label enjoys resurgence in UK

November 1, 2009

Sales of retailers’ premium private labels are stronger than a year ago, according to the latest TNS market data.

Growth in value own label sales, meanwhile, is receding and discounters are falling out of favour as shoppers try them out but fail to revisit.

In the latest 12-week period, Tesco’s Finest sales and Morrisons’ The Best Sales’ increased by 8%. Waitrose, meanwhile, is the fastest growing retailer in the UK at present.

Those were some of the headlines presented by Ed Garner, communications director at TNS Worldpanel during the Insight NACS Future of International Retailing Conference in London.

Garner said it appeared recession was ending and shoppers were winding back a bit.

The picture across Europe is mixed, however. In markets including France and Poland, private label sales are ahead but have dipped in Germany and the UK. Discounters are up in Poland too but down in Germany and level in Spain and the UK.

In the UK market, Tesco is under pressure from Asda, Sainsbury’s and Morrisons, said Garner.

It has responded with aggressive price comparisons on its website and advertising campaigns comparing baskets. Tesco has also used ‘switch and save’ initiatives online to promote its discount brands. More recently it doubled the discount on its Club Card. According to Garner, Tesco is enjoying big growth in its Value brand but smaller growth for the newer discount range.

Asda is doing a lot of damage to Tesco, said Garner. It is also gaining from Aldi, Lidl and Netto. “It is a major retailer that is not losing out to discounters in recession with no Club Card, no gimmicks, just low prices everyday,” he said.

Garner revealed the popular £1 price point was on its way to accounting for 14% of Asda’s turnover and the retailer’s year-on-year growth in alcohol was 12.8%.

Sainsbury’s is also growing share, winning business in both premium products and from lower price points. “It is managing to do a great balancing act,” said Garner.

Sainsbury’s is attracting new customers and shoppers switching from Tesco, he said. Despite being strong in fresh and chilled, its ambient and frozen business is growing faster, he added.

Morrisons’ Better Buy value range has enjoyed strong growth, said Garner. Unlike Sainsbury’s, however, its fresh and chilled offer is growing ahead of total groceries.

“People choose Morrisons for Market Street,” he said.

Despite pressure on ethical markets, Fairtrade and free range have held up well, said Garner but “recession has clobbered organic”, which is down 13% year-on -year.

Garner said more shoppers have been shopping in Aldi and Lidl but largely due to the demise of KwikSave.

“People have been trying discounters out as new shoppers but they are not repeating and they will flock away from them at Christmas.”

Ed Garner: growth in premium private labels