No market share growth for private label in Canada


Private label market share in Canada remained stubbornly flat last year, according to a report from The Nielsen Company that also found consumers around the world are seeing more value in store brands.

Private label’s dollar share in Canada stood at 18.1% across all categories in 2010. That’s down slightly from 18.4% in 2009, and represents the sixth consecutive year market share for private label has fallen. In 2005, it stood at 19.3%.

Meanwhile, private label market share in the U.S. continues to grow, hitting 17.4% last year, up from 17% a year earlier. It was the fifth year in a row market share jumped south of the border.

By comparison, private label market share in Switzerland stands at 46% and in the U.K. at 43%. On the other end of the scale, private label share in China is just 1%.

The Nielsen report, called The Rise of the Value-Conscious Shopper, says that global consumers are still “uncharacteristically frugal” as the economy recovers and they have a preference for stores that offer everyday low prices.

The report specifically focused on private label through a global online survey of 27,000 consumers across 53 countries. It found that more than half of consumers said they purchased more private label products during the recession and that 91% said they will continue to do so as the economy improves.

In Canada, just over 40% of consumers think private-label brands are a good alternative to name brands, versus 37% of Americans.

But Nielsen found that one in every four Canadians think private-label packaging looks cheap. Only 17% of Americans agreed. Canadian retailers, therefore, should take a closer look at their packaging, Nielsen suggested.

Despite the global growth of private label, the Nielsen report said there is still lots of room on store shelves for name brands. In Europe, where private label is more developed that anywhere else in the world, market share still stands at 35%.

And Nielsen said that leading name brands are thriving alongside private-label brands. It’s the small and medium brands that are generally delisted in favour of private label.

Still, the report noted that “reactionary price reductions” by major brands to fend off private label can only offer temporary relief.  “National manufacturers will realize that the best way to guard their brands’ turf will be to treat private label as legitimate competition,” Nielsen said.

On the other hand, retailers should realize that private label is a chance to lead innovation, differentiate their stores, and build up store brand image.

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