Own brands offer control and manoeuvrability for high-end stores

Posted on March 04 2019

by Debrin Foxcroft

Countdown's own-brand offerings have expanded across the store.
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Countdown's own-brand offerings have expanded across the store.

This will be the season of the Rah Rah Skirts. 

Just the same as last season, and probably the next too. 

High end fashion retailer Superette knows they have a winning formula with their frilled mini-skirt, one of 185 offerings under the store's own brand.

Once considered the cheapest options on the shelf, own brands, also known as private labels, are now having their day in the sun. 

Own brands have gone high end, with fashion stores offering their own brand alongside traditional luxury labels.

 

123RF
Own brands have gone high end, with fashion stores offering their own brand alongside traditional luxury labels.

"The reason we do it is to fill gaps in our current brand offerings so if our customers are wanting something but we can't get it from our normal brands, we will make it ourselves," Kirkham said.

Some items have become attached to the stand alone Superette brand, like the Rah Rah Skirts, she said. 

"But everything else kind of slots in. We have the opportunity to look at what's coming and fit in pieces that go with other items so it all becomes quite seamless."

Superette is far from alone in embracing the growth of own brands.

Fee Kirkpatrick, founder of clothing store Shine On said while she remained incredibly loyal to all the brands she stocked in her Whangaparaoa store, she agreed there were areas of the market that were just not being met. 

"There are a variety of restrictions placed on us particularly in terms of sizing with other brands. Quite often you have to buy in packs. Doing our own brand means we can do as many size 16s as we want," Kirkpatrick said.

However, developing a private label has had its challenges.

Superette's founders Ricki Dee and James Rigden have used their own brand to plug gaps in what consumers were looking for.
OLIVIA HEMUS
Superette's founders Ricki Dee and James Rigden have used their own brand to plug gaps in what consumers were looking for.

"We are very new to the industry so we have probably got quite a few things we needed to learn about different seasons and making sure we have the right products hitting the right time, weather wise," Kirkpatrick said. 

"Getting our volumes correct, making sure we had enough size 16s for example and not so many size eights. There is a lot more risk with your own brand." 

Global perception around own brands has shifted. 

A 2018 report by consumer research company Nielsen revealed an up-tick in the market share of own brands, particularly in Europe. 

Report authors said consumers in the Asia-Pacific region tended to be more brand loyal, however there was potential in specialty goods such as organic and free range products.

One of the challenges facing retailers in small countries like New Zealand was the ability to find manufacturing partners, the report authors said.

Bodo Lang, head of marketing at the University of Auckland, said the appeal of own brands was relatively straightforward.

"For retailers, they are opening another avenue for profit. Normally, they are selling somebody else's product so there aren't many avenues for increasing their gain," Lang said.

"Whereas, if they develop their own brand they are going up the supply chain instead of selling someone else's products."

Lang said the development of private labels also benefited producers who could funnel extra stock into a second label, reducing waste.

"Retailers are normally really good at selling someone else's product but they are not great traditionally at developing a product. It requires a different set of skills," Lang said.

The big danger for retail stores was making sure the own brand fits seamlessly with everything else on the shelf, he said.

Shine On founder Fee Kirkpatrick says having her own label (modelled here) allows the company to be more responsive to what New Zealand women want to buy.
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Shine On founder Fee Kirkpatrick says having her own label (modelled here) allows the company to be more responsive to what New Zealand women want to buy.

"The risk for high end clothing retailers is making sure the brand fits. The own brand needs to match what the current perception is of your retail brand."

None of the producers contacted were willing to go on record about  supplying private labels. 

However, the general sentiment from those spoken to was that the process benefited producers, offering them another way to sell product.

"For those that have contracts with the supermarkets, it's good. But it can be hard on those who don't," one farmer in the Hawke's Bay said.

Grocery leads the way

It has been 82 years since Pams baking powder hit the shelves at Four Square.

Since then, Foodstuffs, which owns Pak 'n Save, New World and Four Square supermarkets, has expanded its own brand range to include Value, Pams, Pams Finest and Pams Superfoods. 

Head of own brands at Foodstuffs, Jocelyn McCallum says she has seen the store's private labels radically change from what they were just a few years ago. 

"Prior to the 1980s there was a range of products but it was in the early 1980s that private labels really came into their own," she said.

"There has been a real step change with Pams Finest. In some categories we are the market leader and in others we are on the forefront, bringing in new products."

Marketing expert Bodo Lang says developing an own brand has become an obvious choice for many retailers.
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Marketing expert Bodo Lang says developing an own brand has become an obvious choice for many retailers.

Own brands allow the grocery cooperative to keep pace with changing Kiwi tastes. 

"The staples for us will always be the commodity products like sugar, flour and baking powder," McCallum said.

"But we are always doing category reviews into what our customers want. At the moment, it's salted caramel. Everyone wants salted caramel."

According to Nielsen Scantrack data, private label products accounted for 11.4 per cent of total sales in supermarkets. 

This had remained relatively flat over the last three years, however, global trends showed this changed when large discounter stores, such as Aldi or Coles, entered the market.

Kiri Hannifin, Countdown's general manager of quality, safety and sustainability said in principle, every food retailer now had their own-brand.

"It's how we can respond to look at what is coming on the horizon and respond to food trends ourselves," Hannifin said. 

Foodstuffs has expanded its traditional own-brand range to include higher end offerings and health food options.
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Foodstuffs has expanded its traditional own-brand range to include higher end offerings and health food options.

"It's also how we make it affordable. The big thing is by making it ourselves, sourcing it ourselves, we can make it accessible and affordable."

Hannifin said the ability to control quality and supply was the biggest draw card for the company. 

"Our primary reason is to get new products to shelf and anticipating trends. But when you own the brand, you remove one stop in the process. There's not so many people to pay in the supply chain."

She said there was a growing interest in vegetarian and health foods as well as transparency around where foods had come from.

The company had introduced introduced egg stamping on all its own brand of free range eggs, offering full traceability from farm to plate.

"Kiwis are increasingly aware of the provenance of our foods. So, when it is our own stuff, we have much more control of our own food and where it comes from."