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Karolina Galka

Alexy Celis

Dominique Tourrès

Loïc Sèbe

Béatrice de Ferrières

Private Labels in France

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Introduction A private label is a retailer own brand that can be sold

only in the retailer group stores (art. 62 – NRE act of may 15th 2006).

Example : « Marque Repère », « Monoprix Gourmet », « MieuxVivre Bio», « Casino Délice », « Reflet de France », etc.

1 out of 3 purchased product is a private label*

A private label is 37% less expensive than a nationalbrand*

Private labels keep on growing , near 10% in turnoverper month*

Each retailer has its own label and extends its range of private labels

How private label modified Retail IndustrialOrganization?

What are the retailers strategies ?

What is the near future ?*Nielsen for PLMA

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AgendaIntroductionStructure of the marketHistoryCharacteristics of the private labels marketPerformances of the private labels market

Main strategiesPrice strategyDifferentiation strategy

New trends and challengesConclusion

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History (1/2)

1901 : Birth of Private labelCopy of National brand convenience goods.

(no quality, no design, no retailer image / strategy)1901 : Launch of the first private label by Casino

(grocery, charcuterie, cosmetic, sodas, etc …)1928 / 1931 : Launch of Monoprix / Prisunic on basic

products at low prices & limited quantity

1975-1985 : The revolution of free

productsBasic & low price product with high retailer recognitionagainst national brand

1976 : Carrefour launched 50 generic products

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Characteristics of the privatelabels market 

Manufacturers can be classified inthree general categories:

Large-scale manufacturers that produce

both their own brands and Private Labelproducts

Medium and small manufacturersspecialized in particular product lines and

concentrated almost exclusively onproducing Private Labels (70 to 80% of theprivate labels production)

Retailers become producers and theirown suppliers they become competitorsto the manufacturers : Vertical

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Competitive environmentPrivate Labels compete directly with:

National brand productsHard Discount

Entry barriersRetailers have their own distribution network and don’thave to pay any fee to sell their products in thesupermarkets

Retailers are free to decide their merchandising

Consumer 68% believe that private labels have nothing to envy

to the national brands (Nielsen 2008)

A household spend per year 25% of his budget inprivate label (50% for students) (Nielsen 2008)

 

Characteristics of the privatelabels market 

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Performances of private labels

Nielsen for PLMA

Market shareX 2 in 15 years

Market share

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Performances of private labels

+0,8+1,5

+2,6+1,2+2,8+1,9+2,5

+3,4+1,5+1,5+4+5,4

+2,3

points of evolution.

Casinoleader

with37,9% of marketshareand +5,4

points

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Performances of private labels

Turnover evolution in 2007 (%)

Private label monopolize the market growthNiri, InfoScanCensus

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Strategies of the private labels

Operational result / Added Value

7%

5%

9%

18%

12%

10%

8%

9%

10%

13%

12%

16%

6%

15%6%

14%

Source: CREDOC 2005 

1% < Advertsing expenses / Turnover < 4%

4% < Advertsing expenses / Turnover < 8% Advertsing expenses / Turnover >= 8%

Over 80% of the turnover Private Labels Producing Firms

4% < Advertsing expenses / Turnover < 8%

 Advertsing expenses / Turnover >= 8%Between 20% and 80% of the turnover Private Labels Producing Firms

 Advertsing expenses / Turnover < 1%

 Advertsing expenses / Turnover >= 8%Less than 20% of the turnover Private Labels Producing Firms

 Advertsing expenses / Turnover < 1%

1% < Advertsing expenses / Turnover < 4%

Private Labels Non Producing Firms

 Advertsing expenses / Turnover < 1%

1% < Advertsing expenses / Turnover < 4%

4% < Advertsing expenses / Turnover < 8%

The more private labels suppliers produce, the moreprofitable they are.

Ex: 85% of the Frozen vegetables market is Privatelabels.

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Current strategies

 The traditional view always existsbut retailers develop a real

marketing policy:

 To propose product differentiation

 To encourage customer loyalty

 To develop their brand image

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Development of larger range of products

Propose products for each consumer groupand answer the new trends in consumption:Down-market products low price

Fair trade products

Organic food

Authentic products

Exotic products

Offer quality and low-price products forevery market segment.

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Promotion To encourage customer loyalty : Communication about quality and price

Discount

Fidelity card with special operation (discount, fidelity points)

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New trends & challenges (1/2)

New trendsNew market & increase of range,

Innovation,

Adaptation to the new ways of consumption :Healthy / Natural

Sophisticated product (premium)

Environmental packaging & product

Sustainable development

Ease of use packaging,

example

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New trends & challenges (2/2)

Challenges Transfer private label as the favorite brand of 

consumers (advertising since the 1st January2007),

Growth despite price down of national brands(LME law) and launch of low cost nationalbrand products

Growth despite financial crisis (boom of hard

discount)

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Conclusion

Private labels are a major actor on the foodmarket and influence it on :

Structure : With more than 30% of the marketshare, Private labels are on direct competition

with their own suppliers / national brandsConducts : Focus now on innovation,

communication & every day low price, Privatelabels are the price reference

Performances : +75% of new products in 2years, +10% of turnover per month, Privatelabels pull and monopolize the growth of thefood market.

But with the financial crisis will they keep on this