Turf wars on the store shelves
Promarca notes market share gains and sales increase of branded products
Promarca notes market share gains and sales increases for branded goodsBy Bruno Amstutz At its 71st Annual General Meeting, the Promarca branded goods association presented the Brand Strength 2000 study, which paints a positive overall picture of the situation of branded goods and gives hope for potential in the future.
For the past year, the market research institute IHA-GfM examined the shopping behavior of 2,250 households in German-speaking and French-speaking Switzerland. A shopping basket with 14 product groups from the areas of pre-packaged food and near-food products was registered. These include detergents and cleaning agents, personal care products, paper and hygiene products. Fresh products as well as sugar and flour were excluded from the shopping cart.
The aim of the study was to examine the position of branded goods in competition with retailers' own brands. On this battlefield, a battle of the giants is being fought on the front lines between Coop and Migros.
Migros and Coop pursue different strategies
The two major companies share 64 percent of the total purchasing pie worth CHF 6.5 billion. However, their brand structure is very different. While Migros
Whereas Coop has 96 percent of its own brands in its product range, the proportion at Coop is only 37 percent. Coop is therefore considered the most important partner of the branded goods industry: 35 percent of all branded goods registered in the study were sold in the stores of this major retailer.
Migros' own-brand policy means that the brand structure of the Swiss merchandise world looks considerably different than in other countries: Branded goods hold 55.5 percent of all goods sold. Of the 44.5 percent own-brand articles, Migros produces 30.5 percent. Only 14 percent are produced by other suppliers. Without competition from Migros, branded goods would dominate the market with 79.8 percent of total sales.
However, the development of sales within the last three years shows a positive trend in favor of branded goods. The value of the total basket of goods purchased rose by 5 percent from 1997 to 1999. In the process, the branded goods
8 percent, while private labels increased by only 2 percent. In addition, the share of branded products in the assortment of almost all store chains increased. The only exception was Spar. In 1997, for example, Volg still carried 93.7 percent branded articles; in 1999, the share was 94.9 percent. Waro increased from 90.8 percent to 91.3 percent. Even Migros offers more branded goods than it did two years ago: The share rose from 3.3 to 4 percent.
Innovation and loyalty are strengths of branded products
One bastion of branded products is in the personal care sector. There, the study found a high level of customer loyalty, including emotional loyalty, to branded products. Of the 15 product groups with the highest proportions of branded articles, the first eight ranks belonged to the personal care area.
Migros is also benefiting from sales increases due to the targeted introduction of brands such as Pepsi-Cola in its range. In the wake of branded products, sales of related private labels are also increasing.
For example, following the introduction of Wasa crispbread into the retail giant's product range, sales of crispbreads from its own production rose from 3.4 million Swiss francs to 5.1 million Swiss francs within a year.
Jean Bernard Bosset, director of Promarca, is pleased with the results of the study: "We were pleasantly surprised by the 8 percent growth in branded consumer goods," says Bosset, "and sales increases among Promarca members averaged 2 percent." There is no time to rest on one's laurels, however. For the director, the key strategic principle is clear: "Branded manufacturers must continue to innovate first and foremost."
For Bosset, the creation of new products and trends is the greatest strength of branded products, while private labels tend to swim along in the wake of familiar products. The market situation is also in favor of branded products: "The sales market for private labels in Switzerland is limited," says Bosset, "a private label strategy is primarily worthwhile for retail giants like Migros. Denner, for example, returned to branded products after two years of experimenting with private labels.
For the past year, the market research institute IHA-GfM examined the shopping behavior of 2,250 households in German-speaking and French-speaking Switzerland. A shopping basket with 14 product groups from the areas of pre-packaged food and near-food products was registered. These include detergents and cleaning agents, personal care products, paper and hygiene products. Fresh products as well as sugar and flour were excluded from the shopping cart.
The aim of the study was to examine the position of branded goods in competition with retailers' own brands. On this battlefield, a battle of the giants is being fought on the front lines between Coop and Migros.
Migros and Coop pursue different strategies
The two major companies share 64 percent of the total purchasing pie worth CHF 6.5 billion. However, their brand structure is very different. While Migros
Whereas Coop has 96 percent of its own brands in its product range, the proportion at Coop is only 37 percent. Coop is therefore considered the most important partner of the branded goods industry: 35 percent of all branded goods registered in the study were sold in the stores of this major retailer.
Migros' own-brand policy means that the brand structure of the Swiss merchandise world looks considerably different than in other countries: Branded goods hold 55.5 percent of all goods sold. Of the 44.5 percent own-brand articles, Migros produces 30.5 percent. Only 14 percent are produced by other suppliers. Without competition from Migros, branded goods would dominate the market with 79.8 percent of total sales.
However, the development of sales within the last three years shows a positive trend in favor of branded goods. The value of the total basket of goods purchased rose by 5 percent from 1997 to 1999. In the process, the branded goods
8 percent, while private labels increased by only 2 percent. In addition, the share of branded products in the assortment of almost all store chains increased. The only exception was Spar. In 1997, for example, Volg still carried 93.7 percent branded articles; in 1999, the share was 94.9 percent. Waro increased from 90.8 percent to 91.3 percent. Even Migros offers more branded goods than it did two years ago: The share rose from 3.3 to 4 percent.
Innovation and loyalty are strengths of branded products
One bastion of branded products is in the personal care sector. There, the study found a high level of customer loyalty, including emotional loyalty, to branded products. Of the 15 product groups with the highest proportions of branded articles, the first eight ranks belonged to the personal care area.
Migros is also benefiting from sales increases due to the targeted introduction of brands such as Pepsi-Cola in its range. In the wake of branded products, sales of related private labels are also increasing.
For example, following the introduction of Wasa crispbread into the retail giant's product range, sales of crispbreads from its own production rose from 3.4 million Swiss francs to 5.1 million Swiss francs within a year.
Jean Bernard Bosset, director of Promarca, is pleased with the results of the study: "We were pleasantly surprised by the 8 percent growth in branded consumer goods," says Bosset, "and sales increases among Promarca members averaged 2 percent." There is no time to rest on one's laurels, however. For the director, the key strategic principle is clear: "Branded manufacturers must continue to innovate first and foremost."
For Bosset, the creation of new products and trends is the greatest strength of branded products, while private labels tend to swim along in the wake of familiar products. The market situation is also in favor of branded products: "The sales market for private labels in Switzerland is limited," says Bosset, "a private label strategy is primarily worthwhile for retail giants like Migros. Denner, for example, returned to branded products after two years of experimenting with private labels.
