While Australian consumers lament the removal of some
favourite brands from supermarket shelves and are displeased with the major
grocery chains for doing so, they are also rapidly adopting the home brand
offerings which have taken their place.
It has taken some time for home brands to gain traction, but
slowly and steadily, by experimenting category by category, Australian
consumers are making the switch. This has not been a revolution of changing
buying behaviour, but a gradual evolution, which will set the pattern for the
future. Once they have decided a cheaper option meets their buying criteria
it’s is a big ask getting them to go back and pay the higher price again.
There are several reasons for this:
As with the success of Aldi, the grocery chains’ home brand offerings are
winning over customers category by category. Having not advertised widely until
last year Aldi was patient, allowing consumers to trial its products and spread
the word that great value and high quality are not mutually exclusive concepts.
It began in mother’s groups with talk of nappies and went from there across
their offerings. So too with home brands, word-of-mouth and good personal
experiences have led consumer to adopt more them in more categories.
There was no instant or universal adoption of the new
offerings from Coles, Woolworths and Safeway. The brands themselves did not
inspire experimentation. But with attractive packaging, lower prices than
competitive brands and an ingredient list which appears on par with their
favourites, consumers experimented. This has not had success in every category
and there is no blanket adoption of own brand products. But where they trialled
and were satisfied consumers have changed their selection.
always been interesting asking consumers where home brand products come from.
They had not thought about it and did not know. Indeed, they were left
pondering: how do the grocery chains get their products? Gradually, however, the
realisation is dawning on them that home brands are merely mainstream brands repackaged.
It is not universal as yet, but increasingly more and more consumers know this.
The challenge is to work out which mainstream brand supplies which product.
Among those that do realise this there is still some
inherent doubt as to the make-up of the products. Are these exactly the same
formulations or are they made of lesser quality ingredients. By reading the
back of the packet they are coming to realise that there is no difference in
the products themselves. Armed with this knowledge selecting a home brand is an
easier, and of course cheaper, option.
increasing presence of home brands on supermarket shelves, and in prominent
positions, lead consumers to greater acceptance. It means others are buying
them and so they can’t be bad. It’s a self-fulfilling prophecy.
Smart shopping and
the GFC: Consumers have been on a mission to shop smartly for some years
now. Their aim has been to beat marketers and retailers at their own game by
chasing specials and paying less for more. The GFC has accelerated this trend
and led to consumer loyalty for Aldi, Costco and home brands. There are more
opportunities to discover discounts and consumers are in the mind set to do so.
In focus groups consumers express some anger at the penetration
of home brands and what they see as a take-over of supermarket shelves at the
expense of brands they love and are used to. They also talk about the negative
impact this will have on Australian companies and brands and the financial pressures
they are put under. And while they express this eloquently and with much emotion
they are in no mood to act on their principles. The home brand and discount
revolution is here.
For branded products this requires a twofold response. They
will need to provide products that home brands simply don’t. This means
premium, healthier and more personalised offerings. More importantly brands
will need to return to basics. They will need to argue their credentials and
high quality of ingredients, processes and taste to fortify themselves from
consumers choosing to pay less.