|
|
|
Private
and Sales by Country
Private label is growing in importance in
European DIY sales. The largest market for private
label DIY products is Germany, which achieved sales
of US$2.4 billion in 1998. This is well ahead of its
nearest rival, the UK, which registered sales of
US$1.8 billion.
It is worth noting, however, that although
Germany is the most important market in terms of raw
sales, consumer perception of DIY products is poor
and, as a proportion of total DIY sales, private
labels are relatively insignificant.
PRIVATE
LABEL SALES BY COUNTRY 1994-1998 |
US$
million |
1994 |
1998 |
Germany |
2,309 |
2,421 |
UK |
1,284 |
1,784 |
France |
1,530 |
1,734 |
Netherlands |
803 |
901 |
Belgium |
381 |
528 |
Spain |
87 |
110 |
Denmark |
44 |
72 |
Source:
Euromonitor. |
Private Label Penetration
by Country
In the countries under review,
private label has the highest penetration in the
Netherlands with 32.1% in 1998. This, however, has
dropped from 35.7% in 1994, partly because of the
considerable efforts made by branded goods
manufacturers in the DIY market. The second highest
penetration is in the UK. There, market share
penetration for private label goods declined
slightly between 1994 and 1996 but then began to
grow again, so that by 1998 private label accounted
for 24.6% of the UK market.
In Belgium private label has
made headway compared with the market as a whole and
has increased its market share from 19.2% to 24.4%.
In less than ideal economic conditions, Belgian
consumers are looking for better value for money.
There is pressure on prices in many Belgian markets,
particularly in coatings and chemical products,
tools and equipment and wall and floor coverings.
This is due to greater competition having a downward
effect on prices and also to brand switching to
private label goods. Consequently private label is
growing in market share terms in Belgium and is
highly popular.
The reluctance of German
consumers to opt for private label products (when
branded goods, which are perceived to offer higher
quality, are available) is evident in the market
share figures. In Germany private label goods have
dropped in market share terms from 13% in 1994 to
end 1998 at just 11.5%. This is under half the level
of the UK and Belgium and well below the penetration
levels experienced in the Netherlands. Retailers in
Germany have an opportunity to develop private label
ranges which serve the price-sensitive bottom end of
the market, particularly targeted to the Eastern
regions of Germany where consumers are less
affluent. They also have the opportunity to develop
fantasy brands at the top end of the market, with
the appearance of premium and premier branded goods
but not carrying the store's own name. Private label
development has an opportunity in the German DIY
market and the retailers are currently working
harder to generate more innovative ranges.
DIY
PRIVATE LABEL PENETRATION BY COUNTRY
1994-1998 |
%
value |
1994 |
1998 |
Germany |
13.0 |
11.5 |
UK |
23.4 |
24.6 |
France |
14.2 |
16.1 |
Netherlands |
35.7 |
32.1 |
Belgium |
19.2 |
24.4 |
Spain |
4.9 |
5.7 |
Denmark |
5.9 |
8.6 |
Source:
Euromonitor. |
Private
Label Penetration by Product Category
Private label penetration
varies across sectors and in part depends on the
strength of particular brands in the sectors
themselves. It also depends on the retailers' levels
of investment in private label and their
presentation of private label goods. Private label
is more accepted in certain European countries than
in others and this is a throwback to private label's
development as a whole. In the UK, which is the most
highly developed private label market in Europe,
many retailers have been generating strong and
respectable private label brands for over a century.
Consequently private label is highly established and
well respected in the UK. On the other hand there
are countries where private label development is
very immature and where consumers have a low level
of trust for the private label goods on offer. Here
the DIY retailers have a harder job establishing
private label and would do better to introduce
fantasy branding rather than to try to work against
the tide of opinion and put stores' own labels onto
products.
In the chemicals and paints
category, the highest private label penetrations
occur in the UK, Belgium and the Netherlands. In all
of these countries, private labels account for over
one third of value sales of chemicals and paints.
This is because of the well-established nature of
DIY multiples in these countries and also the
tendency for consumers in these countries to have a
high level of acceptance of private label goods.
In the dynamic French paint
and chemicals category, private label penetration is
also significant with a 21.5% market share. France
is the second largest market for private label
chemicals and paints in Europe at US$517 million,
second only to Germany with US$694 million. In
Germany, despite the low regard that many Germans
have for private label goods, private label paints
and chemicals achieve a high 19.9% penetration. This
is a creditable performance and demonstrates the
extent to which DIY stores in particular have
concentrated on bringing new product innovation into
the private label ranges in order to compete with
the strong branded products.
|
DIY
Private Label Penetration by Product Category and by
Country 1998 |
%value |
CP&P |
DM |
SFP |
T&E |
W&FC |
France |
21.5 |
9.0 |
54.2 |
18.2 |
12.9 |
Germany |
19.9 |
5.2 |
9.0 |
10.7 |
20.2 |
UK |
39.5 |
9.6 |
35.5 |
22.4 |
13.8 |
Netherlands |
38.8 |
16.0 |
60.3 |
15.0 |
12.0 |
Belgium |
38.3 |
16.6 |
42.0 |
14.9 |
9.2 |
Spain |
21.6 |
0.9 |
2.4 |
9.6 |
1.1 |
Denmark |
10.8 |
3.8 |
13.4 |
8.3 |
4.8 |
Source:
Euromonitor.
Key : CP&P = chemical products&paints; DM =
dedicated materials; SFP = semi-finished
products; T&E = tools & equipment; W&FC
= wall & floor covering |
Outlook
for Private Label
Private label will continue to increase its
presence in DIY retailing throughout Europe. In
those countries that have the highest
concentration of retail multiples there will be
more incentive to develop private label. Private
label will give the retailers more of a point of
differential compared with their competitors. In
addition it will give the retailers a greater
share of the margin from goods sold. Consequently
as markets become more price sensitive, private
label becomes more important. In markets that are
heavily dominated by brands, such as power tools,
private label has an opportunity to continue to
develop market share – via both private label
products, particularly in those countries where
private label tends to be well accepted, and
fantasy branding. Fantasy brands can play a part
in these markets by appearing to have the same
qualities as the proprietary brands but actually
being store's own fantasy labels. In those markets
where private label development is currently high,
particularly the UK, and also to an extent France,
the growth of private label for the future will be
curtailed. Consumers will always demand a choice
and private label will reach a ceiling in these
particular markets.
For private label to continue to develop in DIY
retailing, the retailers need to compete not only
on price, by providing a similar product at a
cheaper price, but also by introducing more
product innovation and new product developments
into private label ranges. For private label to
become more of a reason for consumers to visit the
store, the ranges need to offer superior facets
compared with those on offer in the branded
merchandise. For example, in paints, new colour
assortments could be one aspect for potential
development, as well as different pot sizes and
in-store mixing facilities. In areas such as
dedicated materials, private label merchandise
could offer exclusive colours, exclusive shapes
and sizes and special features. In the
semi-finished products sector, private label is
already highly developed. This has come about
because of the lower levels of branded merchandise
in this sector and the high level of new product
development that have characterised the sector.
Private label goods are expected to continue to
grow strongly even in those markets where
penetration is already high.
For the future private label will play an
increasingly important part for retailers in
generating the right image for their stores and
creating additional reasons for consumers to shop
in those retail outlets.
|
Impact
of Private Label
The impact of private label sales has been
limited to several of the largest global markets.
The majority of private label sales originate with
the manufacturers, invariably trying to increase
their vertical integration by expanding into
retail. Generally, private label penetration of
the toys & games market is limited to the
cheaper price end, particularly pocket money toys.
Retailers are more reluctant to enter private
label product development. The highly seasonal
nature of the toys & games market and the
volatile life cycle of products have been major
factors.
The main growth area in this market has been
the production of private label generic lines by
retailers, designed to compete with multinational
brands. Only a handful of the larger retailers
sell private label toys, examples being soft/plush
toys featured in Wal-Mart, Zellers and Toys R Us.
Another factor which has held back private
label product development is the lack of
international or domestic manufacturers and
retailers with sufficient expertise and capital.
The toys & games market remains highly
fragmented with a limited number of global players.
In terms of private label sales in major
markets, Japan and the US had the highest
proportion of sales with 3.8% and 3.6%,
respectively in 1998 and both up on 1994. Private
label sales are increasing in value terms in all
major markets albeit from a very small base.
In Western European markets, private label toys
were found to be few. Consumers in Western
European markets are more brand conscious and are
prepared to pay high prices for quality. As such,
demand for cheaper non-branded toys remains low.
There is an increasing tendency for the
manufacturers/distributor to buy cheap products (mainly
from Asia) and relabel them under their own
private label brand name.
Conversely, private label sales became
increasingly popular in the UK. Retailers, such as
Woolworths and The Early Learning Centre have
produced extensive generic brands, most notably in
the pre-school/infant subsector. In many of these
markets, private label toys are made up mostly of
cheap outdoor toys such as rackets and balls.
In Eastern Europe, private label continues to
be limited due to the underdeveloped retail
structure of the region. In what is essentially a
stagnant market, there is little to encourage
private label development among manufacturers and
retailers.
In this region, and other emerging regions,
there is some hope for private label toys as there
is demand for reasonably priced goods. However, it
is likely to be towards the end of the forecast
period before private label sales reach the levels
seen in Western Europe.
In Latin America, private label is not
available although well developed in other retail
sectors by major supermarket chains. The main toy
chains in the region sell only branded products.
In the Japanese market, private label toys and
games have remained low, partly because of the
market being highly susceptible to new trends.
Private label manufacturers are generally unable
to keep up with new trends or technology.
Additionally, many toys in the traditional sector
are licensed products tied to a limited number of
companies. Outside of Japan, the same is true of
the Asian market. Private label products cannot be
found in the Chinese or Taiwanese markets.
The market for private label video games is
non-existent, and is likely to remain so in view
of the strength and importance of the branded
image in this sector.
|
Toys&Games
: Private Label Penetration in Selected Countries
1994/1998 |
%
value |
1994 |
1998 |
Japan |
3.6 |
3.8 |
US |
3.5 |
3.6 |
France |
1.0 |
2.0 |
UK |
1.5 |
2.0 |
Netherlands |
1.0 |
1.5 |
Spain |
1.5 |
1.5 |
Germany |
0.5 |
1.0 |
Sweden |
0.5 |
1.0 |
Source:
Euromonitor. |
|
|
|