Updated: Feb 4
Private label brands are gaining more and more momentum and interest around the world, are growing rapidly and consumers tend to trust them more and more, international research shows. Experts say this is due not only to a huge change in the strategy of the retail sector, but also to changing people’s attitudes towards shopping.
Over the past five years, from 2015 to 2019, U.S.-generated sales of private labels grew by as much as US$ 14 billion, with an average annual growth rate of 2.5%, twice the number of branded brands, according to research firm Nielsen's latest. data. The fact that people are starting to appreciate the quality of private labels also reveals that in 2018.
Europeans said their attitudes towards private labels had improved over time, with another 76%. Europeans believe that private label products offer excellent value for money.
By purchasing only the product, other costs are avoided
According to Linas Baltušis, Head of Lidl's Sales Promotion Department, although so far many customers have thought that ensuring a very good price-quality ratio for private label branded products is impossible, but more and more customers experience that it is possible. "Often, under the private label, well-known products are hidden, many of them are manufactured even by the same suppliers that offer well-known brands. When negotiating these products, we do not pay for the manufacturer's marketing costs, sales promotions or other non-production costs, we only buy the product itself and its recipe. As a result, we can offer high quality private labels at the best prices,” says L. Baltušis. According to him, Lidl's advertising campaign "Have a choice", which will start in January, will seek to draw the population's attention to the relationship between product quality and price: Every week, customers of the retail network will be offered not only well-known brands at attractive prices, but also alternatives to private Lidl brands. We are convinced that regardless of the choice of the buyers, they will be able to enjoy extremely high quality products at an affordable price for everyone.” (see here for more on Private Label Brand development)
Retail chains have also changed their approach
According to the head of the sales promotion department, the fact that in recent years the population is paying more and more attention to private brands is related to changes in the retail chain sector. “In the past, people from private brands only expected good prices, but that had nothing to do with quality. For some time now, in Western Europe, and more recently in Lithuania, attitudes towards private labels have changed dramatically. Consumers tend to pay less for well-known brands if the same quality can be bought at a much lower price when buying private label products. It can be said that we are becoming more conscious buyers, for whom quality becomes a more important factor than a well-known name,” says L. Baltušis.
The quality requirements will be attested to by each manufacturer
According to L. Baltušis, the main task of Lidl is to ensure the highest quality at the best possible price, and in order to guarantee the extremely high quality of products, no compromises can be made. According to him, any Lithuanian or foreign supplier could testify that cooperation with Lidl is a major challenge due to the requirements for the quality of private label brand products. "The high quality of the products of the retail chain is one of our core values, therefore we constantly invest a lot of our time and energy in properly selecting not only the goods, but also the manufacturers who supply them. After all, the fact that these companies will produce under our brand means a lot, because we take full responsibility for these products,” says the head of Lidl's Sales Promotion Department.