How low will prices go? 2009 might become known as the year of the price cuts, rollbacks, coupon redemptions and strong store brand sales. This is good for shoppers, but will the value strategy backfire on retailers?
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Branded or Private Label -- Who Will Win The Battle of the Shelf in China?With increasing retailer concentration in China, one key focus for manufacturers will be the associated bargaining power of channel retailers. Retailers introduce private label products in a category not only to gain profits directly from the private label, but also to provide greater choice at a different price range for consumers to purchase from. In China, this role has in part been played by the localized brands and the challenge for retailers is to provide trust in their brands to compete against the new private labels.
While private label occupies a noticeable level of market share in developed markets, in Asia, it is significantly lower. In China, private labels represent a very low consumer acceptance, with only 1% share within all FMCG products and 0.3% share within the personal care segments in 2008, even though it was introduced over five years ago. Overall, non-edible products enjoy a higher market share and purchase frequency by consumers than edibles. This is partly explained by the widespread food safety concerns which are actively promoted by the media after issues such as 'contaminated milk.'
With the ongoing growth of the modern trade as well as the current bad economic conditions, the private label segment is expected to grow. Which categories top the list for private label in China and what perceptions do Chinese consumers have about the quality of private label products? Read more about the retail environment in China and the implications private label has to national brand manufacturers in the latest report.
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