Own label is the true battleground between the big retailers. First pioneered in the 1990s with the Tesco Value range, own label has become synonymous with affordability and simplicity. But the classic own-label design – white packaging, utilitarian branding – has not dated well, especially when discounters like Aldi and Lidl offer both quality and price, wrapped up in much fancier garb.
Own label, or private brands, differentiate each retailer against the competition in a way that stocking the same tin of Heinz baked beans fails to do. Own-label sales are up 2.7% year-on-year to £60.3bn, according to The Grocer, compared to branded sales increasing just 1.9% to £54bn.
Shopping trends show that consumers are happy to switch loyalty to own label if the price is right. So whether it’s a unique plant-based range, premium ready meals or just bargain bog roll, retailers are looking to this category to satisfy price-savvy consumers’ triple demand for quality, price and innovation.
We look at the 10 big ideas in own label that are making a difference right now.
1. Delivering the basics
The home delivery market has significantly influenced own-label innovation, with online sales increasing 4.7% to £3.9bn (Kantar). As retailers struggle to make an impact on their own platform, own label is a way to impress new customers and retain existing ones: Both Ocado and M&S must perfect their own-label strategy if they're to retain pre-existing customers in the fallout from the merger, for example. Sainsbury’s took own label one step further when it saddled up with Deliveroo, delivering their pizzas across Brighton, Birmingham, Cambridge and London. Not to be outdone, Co-op offers own-label ready meals on Deliveroo and UberEats, including the Co-op pizza bundled with a Coke and chocolate for a Saturday night in, which demonstrates how far retailers are prepared to push the reach of own-label brands.
2. Good, better, best
Retailers’ signature brands are no longer just about saving money, as the market has diversified into mid and premium ranges too. There’s growth at both ends of the spectrum: Aldi’s basic Everyday Essentials added an extra £18m in sales (Kantar), and yet their higher-end Specially Selected range also topped £1bn in sales this year. But the three tiered, good-better-best format can be confusing, and some retailers are opting for just two standard and premium ranges with simpler messaging. Sainsbury’s dropped its Basics range last year, for example, in an effort to reduce SKUs and simplify the shopping experience as part of its five-year-plan after the failed Asda merger.
3. A rose by any other name
If retailers are dropping obviously own-label brands like Sainsbury’s Basics, their tertiary brands are the savvy solution. Sainsbury’s introduced 120 new products under 12 tertiary brands like Stamford Street and J James & Family, for example, and Tesco has its Hearty Food Co, Eastman’s Deli and Creamfields dairy, which are own-brand products that look and feel like independents to the untrained eye. It’s a win-win: consumers don’t feel self-conscious putting them in their basket and retailers retain ownership of the production process. It’s still a fine line to maintain trust, however, as Tesco experienced when they were criticised for duping consumers with own-label products operating under ‘fake farm’ names. Tertiary products are a lucrative way for retailers to respond to trends, but it must still be done with integrity.
4. Collaborative spirit
We’re seeing more creative collaboration on own label as brands seek to rectify trust through association. Liberty partnered with small artisan producers in their Mini British Food Hall line up, just as Waitrose used Heston or M&S featured Growing Underground salads to boost their cool credentials. In contrast to ‘hidden’ own-label brands, these formats celebrate suppliers and producers as a reassurance of quality. As more challenger brands emerge, and big brands adopt a start-up mentality, these collaborations can bridge the gap for all concerned.
5. The new vegan
Likewise, vegan own-label products are progressing faster than a runner bean. M&S’s Plant Kitchen range is set to deliver £50m annual sales, for example, and it has three times the household penetration rate of Tesco’s Wicked Kitchen, which launched the previous year. We’re seeing great ingredient innovation too: Asda’s Plant Based uses mushrooms rather than soy for sustainability, including duck-less spring rolls and quarter-pounder burgers. Own-label meat-free brands are also dropping the ‘vegan’ label in favour of ‘plant power’ to secure wider appeal, as the names for Tesco’s Plant Chef, Asda’s Plant Based and Sainsbury’s Plant Pioneers ranges all demonstrate.
6. Plastic promise
Biocontributive products, which have sustainability and carbon-neutral principles at their heart, are emerging on the independent market at pace, so big retailers are using own label as a space to fulfil through their own promises on plastic and waste reduction too. Asda pledged to remove more than 23m black plastic trays across its own-label lines, and Morrisons claims to be the first major UK retailer to completely eradicate black plastic from all own-brand food and drink. As sustainability establishes itself as an essential requirement, we expect to see proactive reduced packaging and innovative environmental solutions forming the backbone of the majority of own-label NPD in the coming months.
7. Looking the part
Tesco’s Value range might be iconic, but its stark blue, white and red design only denotes one kind of value. Consumers want value for money, but they’re looking for own-brand products that suit their lifestyle values too – and have a snazzy design to match. Sainsbury’s revamped its Taste the Difference range in 2019 to introduce new lines, a new logo and oven-only aluminium packaging, and Waitrose similarly redesigned their No.1 range with over 200 new launches and reformulations. We expect to see increased customer loyalty driven through innovative own-label design and rigorous brand strategy.
8. Everyone’s at it
Even traditionally non-grocery brands are getting in on the own-label action. Fenwick department store launched its first food and drink range in time for Christmas last year, with plans to expand beyond gifting in the New Year. Likewise, Farmdrop, the ethical online grocer, launched Made by Farmdrop ready meals with fully traceable ‘farm fresh’ ingredients and plastic-free packaging, and One Stop introduced 24 frozen own-label lines to replace branded products in its corner stores. Whilst this category has historically been the remit of big grocery retailers, 2020 will see more convenience and specialist food brands muscling in too.
9. Shelf space
Retailers can drive more profit on own label rather than branded products; in these tightening economic times of brand consolidation, reducing SKUs and streamlining for online, retailers are cutting shelf space for brands to make way for their own label and tertiary products instead. Whether this will strengthen the ever-growing direct-to-consumer market, as independent brands seek a way to work around the retailers instead, is yet to be seen.
10. Amazon is in its Prime
The online megalith launched an own-label spirits brand, Tovess Gin, in October 2019, and Amazon’s private label brands Solimo, Happy Belly, Presto and Wickedly Prime already include coffee, snacks, chocolate and other basics for UK shoppers. Grocery sub-brands Amazon Go, Amazon Fresh and Whole Foods, additionally work to embed the brand into customers’ routines. Retailers are in for some stiff competition, as Global Data predicts Amazon food and grocery sales will increase 175% by 2024, and a strong own-label strategy looks set to be a big part of this.
Own label is the category to watch for innovation, design and fierce competition. We expect to see proactive responses to consumer demands for sustainability and reduced waste, as well as quick reactions to new emerging food and drink trends. Retailers that don’t keep up to speed, could suffer an own-label own goal.