Summary
Given the weak economic scenario, cheaper private labels are a win-win for both retailers (extra margin) and consumers (lower prices).
Analysis
Given the weak economic scenario, cheaper private labels are a win-win for both retailers (extra margin) and consumers (lower prices). Retailers would be tempted to give over even more shelf space to their own labels where they get higher margins than branded products, and it's a losing spiral for the branded FMCG (fast-moving consumer goods) companies. That is obviously worrying for branded suppliers who have invested humongous sums of money and decades of effort in developing their brands. But it also raises questions about whether the consumer really perceives any value out of the billions in advertising and millions of man-hours spent by the FMCG companies in developing the n-th variation of toothpaste or detergent.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
