The importance of private label for distributors
It is a Copernican revolution that has taken place in the world of mass retailing over the past ten years. Private label products, once seen as a first-price stopgap, have established themselves as increasingly important references in the shopping basket of consumers. References which have gradually evolved into mid-range, organic products, and premium products, to the detriment of major national brands.
This revolution can be explained in particular by the fact that private label has chosen innovation and originality in order to to offer differentiating quality products, branded as a distributor. This market, which has long been the monopoly of major brands, now provides visibility and high added value to distributors.
Private label products are now the mainstays of mass distribution. They offer distributors brand visibility and new added value. Far from being satisfied with putting on the shelves and marketing products from major national brands, they are now developing their own product lines which allow them to differentiate themselves. In this Private label has become essential for the image of the major retailers, but also for the development of their activity. It helps to build customer loyalty through an identified and increasingly innovative brand.
A virtuous revolution coming from the growing power of consumers
But if distribution has seized the opportunity represented by private label, this revolution is essentially the result of a great social movement originating from consumers themselves. After years of gigantism and frantic racing at low prices (more for less), the French have been operating for a decade a deep return to more sustainable, more ethical and better for health consumption patterns. These concerns are at the heart of the rise of private label.
The distribution has chosen innovation, local and well-being, to offer product ranges adapted to each public and to all budgets, with the immense advantage of being able to guarantee consumers the origin and the control of the products offered, and especially to be able to communicate about them in its stores.
I remember that a number of experts shrugged their shoulders when Intermarché decided to invest in its own fleet of fishing boats, or when the Système U group undertook to source exclusively from local producers. These brands were, however, precursors, and this type of behavior is currently growing strongly. As such, Private label has contributed to radically changing the image of distribution, passed in less than ten years from gravediggers of small producers, to their main support. The products which arrive today in the stalls of the French supermarkets are fresh, healthy and local. Large retailers can guarantee the origin of all private label content and have clearly integrated a virtuous circle for the planet.
Consumers want to eat local, fresh, seasonal, with good value for money. He also wants to include the agricultural world in his thinking. All these parameters are taken into account by distributors, which explains the growing number of associations and partnerships with small local producers. Many distributors now even use 100% French origin.
The industrial at all costs and mass productions interest the French less and less … and therefore distribution. Price is no longer the only variable. People are willing to eat less, but eat better.
One of the concrete elements of this consumer revolution has been Nutriscore (but also initiatives such as that of the Bleu Blanc Cœur association), which has shaken up distribution a lot and forced it to improve its products. Beyond France, product quality has improved in all the countries that have adopted it. We can see today in Germany, which is far behind in this area compared to France, that distributors are very attentive to the arrival of Nutriscore.
Strong growth, further accelerated by the pandemic
The rise of private label food is a reflection of what happened fifteen years ago in the fashion world with fast fashion (H&M, Zara, etc.). In both cases, it is a question of very rapid growth linked to a new capacity for innovation which turns the situation upside down.
The consumers of 2021 are very changeable and very demanding. They quickly switch from one brand to another and from one purchasing method to another. They want to be efficient at what they buy, and distributors must both offer them unique products (which they cannot find elsewhere), but also continually surprise them. Private label helps to build loyalty while continuing to innovate. For several years, private label has experienced annual growth of 2 to 3% in France. Figures that obviously exploded in 2021 with the health situation (it is estimated that the growth of the sector will be 6 to 8%), which in this context will have been an accelerator of lasting change for distribution.
The rise of private label should also accelerate further in the years to come. In Europe, we have a penetration rate of 35%, which is already substantial, but we should reach the 50% mark within 3 or 4 years. In the United States, the private label penetration rate is 23% and will quickly rise beyond 30%. The room for improvement is still immense in all markets.
To help distributors take this turn in private label, we support them, at Trace One, in all their needs, from idea to shelf. We have developed a suite of applications within a single and inclusive platform. These offer users the opportunity to collaborate to innovate, follow specifications and ensure safety and quality, discover innovative products, identify reliable suppliers and manage calls for tenders from a single space.
Each of our applications plays a vital role in the product lifecycle and can be used stand-alone. But together, they give brands a truly remarkable edge.
Our Marketplace brings together more than 5,000 suppliers with most of the major distribution players in France, Europe and the world, in order to enable them to develop innovative private label products of tomorrow.
Trace One helps retailers, large and small, to find innovation and quality wherever they are, and PGC suppliers to promote their products and their know-how. Serving as a cog between the two is exactly the expertise that we have been providing to our clients for 20 years, with one priority: the satisfaction of clients who place their trust in us.