Choice “The People’s Watchdog” of Australia has an article about the recent growth of store brands in the Australian market. The article features commentary from Coriolis director Tim Morris:

“But supermarket shelves aren’t flexible – there’s little room for growth beyond the initial supermarket floor plan. A supermarket’s own brand needn’t worry about a shelf space squeeze. Where two brands compete for the same shelf, and one brand’s parent owns that shelf, it’s not hard to tell who the winner will be. “At the end of the day, the retailer owns the store and can do whatever they want,” says Tim Morris, managing director of NZ strategic management consulting and market research firm Coriolis Research. “They can put rival products on the bottom or top shelf, and their own products at eye level. They can manipulate the price. The only controls are competition and the consumer.”…

Australia is in a relatively early phase of home brand expansion. One of the world leaders is the UK where, according to a 2011 Nielsen report, private label sales account for 52% of supermarket sales. The UK’s four majors, Tesco, Asda, Sainsbury’s and Morrisons, have a combined market share of about 76%. Individually, they hold from about 12% to just under 30% of the market.

Morris says that while the UK supermarket landscape is generally positive, private label expansion can go too far, as happened in Sainsbury’s a few years ago. “[They] just kept increasing the number of private labels and removing brands. They tried to jam private label down people’s throats – it was up to 70% in stores. Customers didn’t want to shop there.”

As Sainsbury’s was aggressively expanding its private label offering, its competitors were moving at a slower pace. So customers went to those shops where choice still existed and, Morris says, Sainsbury’s sales dropped and so they had to wind it back.

While Sainsbury’s ventured into an aggressive private label expansion alone, Coles and Woolworths continue their much safer game of follow the leader – each time one launches a new pricing strategy, the other follows. IBISWorld says that “the battle of the private labels is expected to intensify”. Customers will have noticed this change too. It would be interesting to know the opinions of customers on the matter using a questionnaire or survey to further understand the importance of private label expansion.

But Australian consumers aren’t powerless, because the war for shelf space is really just a battle for your shopping dollars. Morris says it’s a simple case of money talks. “Say you go shopping one day and your favourite brand of marmalade is gone. If you complain and then go to other stores, the marmalade will return.“…

With the private labels heavily dependent on social media – to be specific Instagram followers, Facebook likes and shares to spread the word about their brand, it is likely that many customers would be attracted to the same and opt for it. But the main question remains – is the quality of cheaper home brand products consistent with those produced by big-name brands? In our previous large-scale private label versus leading brand taste and nutrition tests (see CHOICE, September and October 2010, or log on to choice.com.au/privatebrand), the results were mixed.

Morris believes home brand quality has been sketchy in the past. “Australia went through a period of bastardised products. When a brand owner is selling quality they have to draw a line in the sand and say they can’t make it any cheaper than that. When you make private label, the retailer can tell the manufacturer to make it cheaper, and they will.” Read the whole article here…