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Research: European retailers reduce the price gap of their own brands with discounters

The latest research from International Private Label Consult (IPLC) identifies a continuing closing of the price gap between European retailers and discounters.

Specifically, in its new report, "Mind the Gap - Retailers across Europe continue to close the price gap with Discounts," IPLC analyzed the private label architecture and pricing strategy of 16 retailers in eight countries. The research took Lidl as a proxy for the discount market and compared the findings with IPLC's earlier 2016 research, "Retention of Consumers Tempted by the Discount Model."

IPLC concluded that many more retailers are actively looking to bridge the price gap between themselves and discount stores. They are not simply lowering their prices, they are adapting their private label architectures.

The result of all this activity has been the closing of price gaps for standard private label brands. Compared to national brands, the standard private label is 47% cheaper, a significant change from 2016, when it was 33% cheaper.

The average price gap between Lidl and national brands has remained about the same with 55% cheaper (54% in 2016). The combined effect sees a significant reduction in the price gap between private label retailers and Lidl from 21% in 2016 to now just 8% (on a selected range of products).

"This notable increase in the use of private labels to combat discount stores bodes well for future growth in private label volume share in all European markets," the research concludes.


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