Growth of discount chains benefits private label products

Growth of discount chains benefits private label products

In a retail landscape characterised by a fall in numbers of outlets (1,056 fewer than in January 2014 according to IRI data) and the crisis of traditional formats, particularly hypermarkets, the discount chain distribution format is showing a trend-bucking performance.

The term “distribution convergence” is increasingly being used to indicate a growing similarity between formats in terms of pricing strategies, assortment policies and sales service. Against this background, discount chains more than any other kind of outlet are adopting a repositioning strategy that is making them increasingly similar to supermarkets. This includes the use of contextual displays for promoting products, new assortment approaches with a special focus on manned counters, and a pleasant sales environment, all within a context that remains undoubtedly low cost (average price trend down 0.4% by volume according to IRI).

Comparing the various distribution formats in terms of assortment, one figure that stands out is the % of fresh products present in discount stores (Figure).


Figure
– FMCG assortment in the various distribution formats (average number of items as %)



marca_ottobre7.png


Source: IRI

The trading-up process adopted by discount chains is benefiting private label products, which are naturally suited to the format. According to IRI figures (progressive May 2015), the value market share of private label products with respect to total FMCGs increased
 

 
 


    BACK