	February 2010

	IN THE STORES Edeka is introducing the Edeka Zuhause brand, that includes 150 cooking and baking products
	MARKET RESEARCH Big retailers post higher sales but lower profits
	PLMA NEWS Roundtable Conference to be held 24-25 February in Istanbul
	EVENTS

Premium retail brands regaining share in UK

Premium private label products are regaining market share following the surge of value brands introduced during the height of the recession in the UK. Premium products are posting strong sales gains, while sales of the lowest-price items are suffering, according to data from TNS published in The Grocer.

   TNS found that the cheapest retailer brands at all supermarkets declined 2.8% in a recent 12 week period, compared to a 46% gain a year earlier. While premium private label products are on the rise, the same cannot be said for organic ranges, where sales dropped 14% year-on-year.
   In line with this trend, two UK retailers have announced new premium ranges. Waitrose is relaunching its frozen range, adding bakery products including continental pastries, breads, pies and desserts, as well as risottos, pies, casseroles and desserts to the range.
   Meanwhile, Budgens is revamping its spirits range to give it a more stylish and consistent appearance. The relaunch, in two phases, consists of new upmarket label designs with a more consistent look. The new identity is being introduced on vodka, gin and Scotch whiskey followed by sherry, cognac, brandy and white rum next year.

Wal-Mart expands global sourcing

Wal-Mart is starting a globalisation programme that combines purchasing across national frontiers. The retailer aims to increase the proportion of goods that it buys directly from manufacturers, rather than through third-party procurement companies or suppliers. Shifting to direct purchasing could reduce costs by 5-15% across the supply chain within five years, the retailer says. The long-term goal is to shift about 80% of purchases to direct sourcing.
Wal-Mart has established four global merchandising centres for general goods and clothing, including a centre in Mexico City focused on emerging markets and a centre in the UK to serve its George brand. Direct purchasing of fresh fruit and vegetables will also be done on a global basis, rather than working through supplier companies.

Carrefour plans bigger price cuts

   Carrefour CEO Lars Olofsson said the giant retailer plans significant price reductions in the year ahead. The retailer aims to invest one third of the 3.1 billion euros that it has saved through cost-cutting into lower retail prices. In an interview with Le Figaro, he added that the rest of anticipated savings will be used to “recover profitability”.
   Looking abroad, the Carrefour executive said the retailer would definitely stay in Brazil and China, but he wouldn’t rule out “revising the company’s position on a number of other emerging markets where the potential is not important, or if we have no chance of becoming leader”.
   France accounts for about 40% of Carrefour sales and the retailer’s market share there is now climbing. Olofsson attributes the gains to “the attractiveness of the Carrefour brand and improving our price image.”

Henkel cuts back its brands

Trying to improve profits in the face of flat sales, one of Europe’s big brand companies, Henkel, has announced plans for a significant reduction in the number of its brands in its portfolio. “We will say goodbye to about 40 to 50 brands, or combine them under umbrella brands,” the company told Sueddeutsche Zeitung.
Currently, Henkel offers more than 700 brands, with the ten top brands accounting for more than 40% of sales. Henkel has already disposed of about 20 brands in the past year. The company executives do not see a stable economic recovery in sight.

New ad rules in France

The ARPP (Autorité de Regulation Professionnelle de la Publicité), the non-government organisation that regulates advertising in France, has published a new set of rules for cosmetics. The new code includes changes with regard to the numerical presentation of product performance, the use of terms such as ‘without’ or ‘free from’ and claims that a product is natural or organic.
Phrases like “without parabens” or “phthalate free” should be avoided as they could encourage consumer suspicion towards certain substances. The advertising of natural and organic products will also have to undergo changes. A cosmetic product can only be described as natural if the complete product contains a minimum of 95% of its ingredients that are either natural or of natural origin. The new rules will come into effect 1 March 2010.

Douglas aims to double private label sales

Douglas, the health and beauty retailer, plans to double sales of private label and exclusive labels in its main perfumery business within the next three years. “We want to reach a share of 15 to 20% of all sales by the end of 2012,” according to Chief Executive Officer Henning Kreke. Currently market share for retailer brands stands between 5-10%.
One goal of the increase is to increase profits at a time when value-conscious shoppers are making it difficult to increase sales. Also, some of the big manufacturer brands have begun selling their brands through discount retailers, putting pressure on margins at retailers such as Douglas. The retailer has its own Douglas Beauty System skin care and cosmetics line.

Metro revamps its brands in Spain

Metro has announced plans for a major restructuring of its private label programme in Spain. The goal is to create stronger brands that focus on specific markets—such as office, hotel, and café products. The total number of brands is expected to drop from 50 to 6. Metro’s strategy aims to create stronger brands while cutting costs. Metro wants to increase its sales by 40% in Spain over the next two years.

Private label gains in Australia

   The battle between private label and manufacturer brands is heating up in Australia’s supermarkets. New data shows that the increased promotion of private label by leading retailers is paying off. TNS Global reports that one of every three Australians now buy private label products as frequently as branded products, and in the future, more than half (54%) expect to buy more private label than branded goods.
   The largest Australian chains, including Woolworths, Coles, and IGA, have all reported the strong growth of private label and plan even more investments in their brands. The trend is being driven, analysts believe, by Aldi, which is aggressively expanding along the eastern border.
   While many retailers have been stepping up their promotions for private label, the promotion that has drawn the most attention is Woolworths’ ad comparing its Home Brand products to brands such as Nestlé and Kraft based on price, quality and country of origin.

Aldi plans to enter New Zealand

Aldi, which already has more than 200 stores in Australia, is getting ready to enter New Zealand. The retailer has already registered more than 100 trademarks, opened a web domain, and sent out staff to look for store sites.
Aldi’s market entry would undoubtedly shake up competition. The country’s grocery market has been characterised by the highest food price inflation within the OECD group of countries since 2000 and is controlled by only two large players—Foodstuffs and Woolworths.

Lidl introduces regional brand

Lidl has launched its regional foods private label under the “Ein gutes Stück Heimat – Ursprung ist Heimat” ( “A good piece of home–origin is home brand" ). The initial range consists of eight dairy lines but plans call for expansion beyond the dairy category. Lidl is promoting the products as coming from sustainable agriculture. The items are available at the retailer’s Bavarian stores and said be produced from Bavarian cows, Bavarian farmers, and Bavarian dairies.

Marks & Spencer launches ready meals

UK retailer Marks & Spencer has launched a range of private label healthy eating ready meals called ‘Simply Fuller Longer’. The range was developed with advice from scientists at the Rowett Institute of Nutrition and Health at the University of Aberdeen. Although all products are rich in protein, they do not provide a low carbohydrate diet. All meals provide some carbohydrate including varied sources such as beans, pulses and vegetables. There are over 34 products in the range, including meals, salads and sandwiches.

IN THE STORES

Edeka is introducing the Edeka Zuhause brand, that includes150 cooking and baking products.

Système U is launching a range of eight private label organic wines this month. The range costs between 2.75-5 euros and includes Bordeaux and Côtes du Rhône.

Sainsbury’s in the UK has launched a television campaign for its Basics food range starring celebrity chef Jamie Oliver.

Aldi Süd’s Hofer in Slovenia has begun special coupon promotions, including buy one, get one free offers with coupons from Hofer’s weekly leaflets.

Leclerc has received permission from the government to acquire 25 Billa stores in Poland.

Marks & Spencer is offering a netbook computer under its own brand. The price is 279 pounds.

Globus, the German hypermarket and DIY retailer, plans to introduce two brands this year. There will be a premium brand called Globus Gold as well as an economy line.

Poundland in the UK has introduced the Red Hot Value range to all stores. The range will include household brands, health & beauty products, essential food lines, partyware, toys, stationery and paint & decorating tools.

Rewe is running a TV advertising campaign, promoting its entry level private label “Ja!”. The campaign compares prices of 400 SKUs with those of Aldi on a daily basis.

Auchan will test a number of store formats this year, including an urban hypermarket (Auchan City), a premium hypermarket (Auchan Gourmand) and a nonfood store (Auchan Home).

Netto plans to open between 18-22 stores in Sweden this year.

Marks & Spencer aims to open at least 50 stores in India over the next few years. The retailer currently has 14 stores across in the country.

Lotte in Korea has launched a premium food label, according to local press reports. The Chef brand includes around 50 products, such as pasta and noodles.

MARKET RESEARCH

Big retailers post higher sales but lower profits

   The world’s largest retailers increased their promotions to increase sales last year, but the strategies resulted in profit declines, according to a study of the world’s 250 biggest retailers by Deloitte Touche Tohmatsu.
   For the world’s top 250 retailers, sales grew by 5.5%. Average profitability fell from 3.7% to 2.4%, with European retailers suffering the sharpest fall—from 4.1% to 2.7%.
   The report found that retailers have all increased their sales in the past year, but two thirds of them reported lower profits. “This has been a tumultuous year for the global retail industry. Sales growth slowed and profitability fell, sharply for some. Many retailers ‘bought’ sales with heavy promotions which hit the bottom line hard,” Deloitte said.

Eating habits change in Germany

While the majority of Germans still have traditional eating habits, the younger generation is tending to eat at less regular times and consume more food outside the home, according to a new study by GfK Panel Services.
Three main meals and an afternoon snack remain the norm, but younger people are eating and drinking less regularly. Those aged 20 to 24 also eat on the go most frequently, consuming around 40% of their meals away from their own homes. The proportion of those eating outside the home falls considerably to 28% on average across all age groups, GfK reports.

PLMA NEWS

Roundtable Conference to be held 24-25 February in Istanbul

   PLMA’s Annual Roundtable Conference focuses on strategic issues for private label and provides insight on an important emerging retail market, Istanbul.
   The Conference, to be held 24-25 February, has the theme: “Looking in the Mirror: What is private label doing right? What is private label doing wrong?” The topic will be examined by experts looking from three different perspectives—the manufacturer’s, the retailer’s and the consumer’s.
   Speakers include: David Shriver, former adviser to the CEO of Carrefour; Nathalie Pellen, former Commercial Director Food, Casino; Richard Herbert, Global Business Insight and Development Director, Europanel; and Jeremy Whinnett, Business Solutions Director, Agentrics.
   On Wednesday, 24 February, Conference attendees will have the opportunity to visit major supermarkets and hypermarkets in Istanbul after the store tour briefing by Ayse Dincer, Editor, Dünya Gida and report on retailing in Turkey by Robert Gregory, Research Director, Planet Retail. Host hotel for the Conference is the Hilton Istanbul. For more information, please contact conferences@plma.nl.

EVENTS

24-25 February	Annual Roundtable Conference Istanbul
18-19 May	“World of Private Label” Trade Show Amsterdam
14-16 November	U.S. Private Label Trade Show Chicago
8-10 December	Shanghai Private Label Fair Shanghai

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