Private Label: Arrived to Stay?

In the retail business, large distributors boost the sales of their own brand products through strategies aimed at consumers who prioritize the price factor over other elements when buying.

Wednesday, August 7, 2019

Globally, the tendency to buy private label products is becoming more and more evident in markets, as companies engaged in the retail trade of other products, such as supermarket chains, are capitalizing on their experience by placing their own products and competing with their suppliers.

William Jaubert, a researcher at the School of Business Administration at the Instituto Tecnológico de Costa Rica, explained to Elfinanciero.com that "... studies by the Private Label Manufacturer’s Association reveal that one out of every five products marketed in large chains within the United States is a private label, and Costa Rica could be moving in that direction."

You may be interested in "Where are the consumers who spend the most?" and "Where do consumers transit?"

Jaubert added that "... The boom in own labels suggests that it is a path that many distributors will follow, as it becomes a strategy for growth in sales in the relatively short term. And the trend is not only shown in the field of food and beverages, but also in technology, audio, video, clothing, vehicles, among others.

Also see "Changes in Consumer Behavior

Walmart is one of the corporations taking advantage of the trend towards private label consumption. Mariela Pacheco, deputy manager of Corporate Affairs of the company, told Elfinancierocr.com that they ventured into the topic "...of private labels in the 80's, with Sabemas. Now the offering includes Equate, Great Value, Supermax, Suli and Parents Choice."

According to Jaubert, private labels are taking advantage of the weakening of other recognized brands through marketing strategies focused on consumers who only think about price.

In this sense, according to a study carried out by a consulting firm in the Guatemalan market, the most economical, adaptable and irreplaceable brands are those preferred by consumers in the current economic context.

One of the conclusions of this study is that if brands do not generate a product with a different size or presentation that helps the consumer perceive that it saves money, they will face failure.

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Supermarkets are one of the outlets where the most own brand labels can be found, and these products are gaining ground as consumers perception over their quality improve.

Currently in Panama 2% of supermarket sales correspond to own or private brand labels and 64% to cheaper brands, according to studies cited by Martesfinanciero.com.

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