The rise of private label shares in these recent years in Europe and Italy, the consolidation of the “made in Italy” international image and of the various private label products were the main focus of Marca, the first Italian exhibition conference on private labels held in January in Bologna.
Maura Leonardi
Two days dedicated to private labels operators and to large-scale retail trade. This event represents, together with PLMA - the traditional yearly private labels fair, held in Amsterdam (this year it will be from May 25th to 27th) - an important meeting occasion to understand the trends of this sector.
THE “REPORT ON THE PRIVATE LABEL IN ITALY”, ONE OF THE SPEECHES HELD DURING THE CONFERENCE, HAS UNDERLINED AN IMPORTANT FACT: today the purchase and consumption habits have changed, the consumer is constantly looking for quality and convenience.
A fact confirmed by the growth of the private labels market share in all products. Toilet paper accounts for 25% of private labels, with a 15% difference with respect to brands. The retail mix policy - prices average level blockage, increased investments on communication to support private labels, promotions increase, lowest price products inserted in many categories - adopted by retailers is one of the elements that can explain the rapid market penetration of these products.
INDEED, TODAY THE LARGE-SCALE RETAIL TRADE HAS CHANGED ITS APPROACH TO PRIVATE LABELS DEVELOPMENT: in the past, private labels used to evolve passing from lowest-price products (low-quality convenience goods) to premium products (high-quality products resulting from advanced innovations). Today some retailers are carrying on strategies based on the contemporary development of private label, premium and convenience products. The year 2004, in particular, has been characterised by the success of lowest-price products promoted to: emphasise the concept of convenience by focussing on lowest-price products, conquer those market segments to which such products refer, use low price as a useful means in unfavourable economical conditions. Besides this new market scenario, another aspect is worth mentioning, that of customers’ new expectations towards private labels. Consumers pay today more attention to their trolley; the quality-price ratio and the loyalty to the retailer as guarantor of the products’ quality are two important elements that contribute to Private Label products consolidation.
THE ELEMENTS THAT MOST INFLUENCE THE CONSUMER’S PURCHASING BEHAVIOUR CAN BE CLASSIFIED AS “MORE INFLUENTIAL” AND “LESS INFLUENTIAL.” To the first category belong value perception and familiarity with retailer and product; to the second belong risk perception and quality difference. This entails that creating a strong retailer identity contributes to strengthen the first two aspects, thus consolidating private labels. In the future, a further development of private labels in Italy will mainly depend on retailers’ capability to affirm and consolidate their corporate identity, to differentiate among private label products according to their positioning, to promote retail mix policies, to consolidate partnerships with copackers1 , competent in product and process, able to enhance efficiency. The role of private labels in the Italian retail trade indicates a rapid evolution that will bring the Italian retailing model nearer to those of many other European countries; many new business opportunities will originate for small and medium industries, favourable for the growth of the copacking market.
The risk/opportunity balancing for the industries operating in the fields of hygienic/sanitary products will depend on the industries’ innovation capability and on their flexibility in answering the retailers’ needs, which usually propose very strict conditions and have a strong bargaining power.
The retailers’ internationalisation and expansion policies will progressively increase the influence of private labels also in hygienic products, resulting in the need to develop rolls with high added value. The investments on Research and Development will lead to elaborate technological solutions that will introduce on the market softer and more resistant rolls, decorated, embossed, printed: all aspects that confer the product high added value. The capability to answer the different needs of consumers will represent a competitive instrument to establish a loyalty relationship with retailers, indispensable to remain on the market. The large-scale retail trade operators are today searching for a better, stable and transparent collaboration with producers, to create win-win business opportunities in negative economic conditions. A chance for made-in-Italy products to speak Italian also abroad. •