Today’s Dominion Post discusses the “supermarket wars”:
“Retail analyst Tim Morris, of Coriolis Research, an Auckland market research firm, says store brands do well when the economy is down. “But when the economy is roaring away, consumers return to the brands they know and love.”
Mr Morris says that often when store brands grow in popularity, it is the smaller manufacturers being squeezed out, while loyalty to popular brands remains strong. But manufacturers can sometimes have the option of producing the supermarket’s own store brand products to remain profitable…
Coles and Woolworths are accused of mirroring designs, colours, names and labels of well- known brands. Mr Morris says this is a common trend worldwide, though not seen much in New Zealand.
“It’s just a game that is played. Manufacturers are constantly concerned about it but it doesn’t really impact the number one brand.”
Products like yoghurt and vitamins are constantly changing so copycat brands find it easier to focus on the basic products like bags of sugar, which generally can’t change much. “There’s always something going on, it is constant tech-warfare. Some categories are very resistant to private labels.”
Mr Morris says consumers are generally very loyal to brands even if there is no real logical difference. Customers have strong brand loyalty to some products and in areas like tobacco, razor blades and hair-dye store brands will never do as well.
“Dairy is more susceptible to private labels because there’s not much innovation. New Zealand is a long way away from the rest of the world. We are just seeing the slow and gradual growth of private labels.”