Own-label... The new brand?

An ad caught my attention lately, for Aldi, I found it simplistically funny. We see an elderly lady sitting at her dining table who says “My husband likes these tea bags” (shows PG Tips) “And he also likes these tea bags” (shows Aldi Red Label) “I don’t like tea... I like gin”. In taste tests 133 liked PG Tips and 77% of them also liked Aldi.

I know economising is Aldi’s whole premise, but I also found this ad particularly apt in the current consumer climate. The purchase of own-label products is seen by consumers as a good way of saving money. We are all questioning which brands we really value, and we are starting to be honest with ourselves about which brands we can replace with cheaper and own-label substitutes. There is a push- and pull-effect here, with supermarkets investing in their own-label portfolios and consumers becoming increasingly accepting of these cheaper alternatives, reinforcing the competition between own-label and brands.

By providing a full range of values for their products, supermarkets are providing options so consumers can premiumise their “valuables” and can down-grade items they value less. This is done on an individual level, because as one man buys economy eggs and premium tissues, another will buy premium eggs and value tissues. Supermarkets recognise this – with their value ranges spanning the full scope of consumer products – fresh produce to household cleaning products to white-goods, and are increasing their ranges of retailer premium own-label with organic and Fairtrade extensions.There is only so much shelf-space so with supermarkets extending their own-label lines, other manufacturer brands are being pushed out.

The popularity of own-label has intensified. People are now, more than ever, less convinced that well-known brands are better than own-label, with more than half of consumers considering own-label to be as good as manufacturer brands. As consumers are more willing to switch between own-label and manufacturer brands, brand loyalty is becoming harder to achieve. 

So how can brands fight back?

• It is becoming increasingly important to develop distinctive brands that establish customer loyalty and compete effectively on factors other than price. Identify what brand essence the consumer bonds with and enhance this, keep brand promises, provide outstanding customer service, and develop websites and online purchasing opportunities. Make the customer feel valued by ensuring all contact points are first-rate. ABs and people in the pre-family lifestage are the most averse to own-label, so invest in the brands that target these audiences to take advantage of this connection.
• Alternatively, offer low-cost versions of key brands, particularly for targeting families and those on lower incomes. However, to avoid risk to long-term equity, ensure your company has the resources to develop these new lines clearly and separately.