Owning Own Label
3 March 2016
In light of the recent agreement between Morrisons and Amazon there have been flurry of questions around what it will mean for the grocery sector, not just for online competitors but the market as a whole. Morrisons, the smaller of the ‘Big Four’ supermarkets will act as a source of grocery products for Amazon Pantry and Amazon Prime Now services. Amazon Pantry was launched last year but with a fundamental element of grocery absent, fresh.
One of the particularly compelling elements of the agreement is that Amazon will be selling a few hundred of Morrisons own label products. This could be huge for Morrisons as over half of supermarket sales are attributed to own label lines.
Ed Sibley, Client Services Director at him! commented, “It will be interesting to see what the latest news from Morrison’s and Amazon means for their own label range and whether this will provide a meaningful new distribution and sales avenue for the grocer’s strong own brand range.”
We spoke to shoppers about why they choose own label products and perhaps unsurprisingly the highest importance ratings were ‘price’ and ‘value for money. They are also most likely to be students. Clearing shelves to make way for own label products in densely populated student areas is a way of maximizing on this opportunity in store. This is also likely to mean that students will make for valuable shoppers for Amazon as they are both tech and price savvy.
Currently, it is the discounters that are owning the own label offering whilst convenience stores could be doing more. We asked shoppers ‘which own label brands ‘make you feel savvy?’, Aldi and Lidl came out on top.
However there is plenty of scope for convenience to grow alongside them. Sibley added, “Across all retail channels own label is playing an increasingly important role in both providing value to shoppers and a point of differentiation for retailers. In the discounter model own label has become the main focus to hit market leading price points whereas in the convenience symbol group sector own label is ever more often seen as a focus for driving retailer and shopper loyalty to a particular fascia.”
Aside from the opportunities in own label to be led by the new Morrisons/Amazon collaboration, we have seen other developments in our midst. Gone are the days where own label means lesser quality. Retailers such as M&S and Waitrose are not trying to sell a low cost copy of the category leaders; they are distinguishing themselves by offering premium and quality products. Their own label ranges stand out on shelves because of their aspirational and aesthetically pleasing packaging.
Whilst the deal between Morrisons and Amazon could mean big changes in the grocery channel as major supermarkets in particular feel an added strain, there are other avenues to explore. Clear opportunities for own label to grow and develop in exciting and interesting new ways are just one of them!