According to an article published in October in Italian business newspaper Il Sole 24ORE, the fast-moving consumer goods (FMCG) market has finally returned to positive territory after three long years of crisis in which the mass retail sector reported losses in sales of 1.4 billion euros.
Citing IRI data, the article notes an upward trend in sales in terms of both value (+2%) and volume (+1.6%). In the first seven months of the current year, the mass retail sector posted sales of 38 billion euros, an increase of 750 million euros over the same period in 2014. But while these are very positive and encouraging signs, the performance of the private label segment has been less satisfactory. After years of continuous growth, private label products have lost 0.5% share, dropping from 18.7% at the end of 2013 to this year’s 18.2%.
This is largely due to the fall in competitiveness of private label products against manufacturers’ own brands, which as a result of significant promotional investments have reached prices that are equal to, and in some cases lower than, those of the private label products.
The outlook for the FMCG sector is therefore positive with further 2-2.5% growth expected by the end of the year, whereas IRI estimates suggest that the share held by private label products will maintain the current trend.
So what does the future hold for private label products? Promotion certainly cannot be considered the most effective way of regaining market shares given this tool’s low level of distinction in the market. Innovating the product assortment and focusing on the premium segments may instead be key strategies in responding to consumers who are increasingly indifferent to promotional tools and instead seek high-quality products associated with values of sustainability and well-being.
Figure – Trend in FMCG sales, figures updated to end of July 2015