帮助解决零售业自有品牌困境的策略

© Oliver WymanOn top of inflation-induced cost price volatility, retailers are now facing thefallout of consumers shifting to less-expensive channels and product ranges.The latter has cost European retailers more than €700 million of annualizedcommercial margin already, turning many private label portfolios intoliabilities within just 12 to 18 months. As consumer spending may not returnto pre-2022 levels for several years, it is critical for retailers to address thischallenge seriously and head-on. This report highlights actions to considerbased on our experience working with retailers over the pastdecades.THE PRIVATE LABEL DILEMMA TODAYPrivate label lines have been a key play for most retailers — many have invested heavily invalue products as entry-level ranges to combat discounters, as well as in better and best linesto differentiate from peers. To support their ambitious private label share targets, retailersdedicated efforts to develop sophisticated sourcing, product management, and marketingcapabilities. The strategy not only resonated well with consumers during times of stableincome growth, but also strengthened retailers’ bargaining power in negotiations withbrandmanufacturers.In 2022, however, inflation and high interest rates affected disposable income and forcedconsumers to “trade down” to lower-priced products. As it will take years for consumerspending power to recover the industry should plan for a continued shift downwards inthe foreseeablefuture.Exhibit 1: Private label value share of total FMCG1in EuropeIn billion eurosEuropePrivate labelFMCG1brands36.4%Private label share of total FMCG1(12–month rolling)+1.3 ptsIncrease of private label value shareAs of July 2022, growth versus previous year2163775931. Fast-moving consumer goodsSource: IRI “demand signals” (October 2022) © Oliver WymanAt first glance, the growth of private label is good news. As cheaper alternatives to brandedproducts, private labels can slow the shift to cheaper competitors or channels, while alsohelping consumers through the cost-of-living crisis. However, that is not the fullstory:•Entry range growth dilutesprofitabilityEntry ranges are an expensive “defense mechanism”: They allow for a consumer top-upon spend that would otherwise have gone to discounters, but at a lower margin that isonly affordable with low volumes. Now that volumes are growing faster than expected,the affordability of such mechanisms is in question — the cannibalization of moreexpensive lines by entry-level ranges spells disaster for overall commercialmargins.•Continued pressure on entry range prices and marginsAs discounters expand share and strengthen their cost advantage by keeping prices lowand gradually raising product and quality standards, retailers are facing a volume shifttoward discounters and have a tough choice to make: follow on price and quality andtake a margin hit, or improve margins but have a greater price disadvantage and a lossinvolume.•Slippery “trading down” slopeToday consumers can easily trade down well-crafted “product ladders” (that is, rangesof products varying in price and features). This leads to volumes steadily flowing to thebottom of the range, which negatively impactsmargins.•Better and best private label ranges under pressureVolume declines in key parts of private label portfolios cause financial turmoil, withbusiness cases increasingly under water, volume commitments to suppliers spiraling outof reach, and consumers turning a cold shoulder to brandmessaging.Exhibit 2: Switching from brands to private label ranges, and within private label rangesPremiumrange privatelabelOrganic/specialtyrange privatelabelQualityrange privatelabelEntryrange privatelabelFMCGbrandsSource: Oliver Wyman © Oliver WymanAs a result, while the first wave of challenges rooted in the return to inflation has beendifficult to absorb, this second-order effect will create even more challenges. First,commercial margins will continue to be under pressure. The mix change has already costthe European food retail sector north of €700 million annualized commercialmargin.Second, the strategic intent behind added-value private label lines is clashing with thenew reality of crumbling volumes during the cost-of-living crisis. Retailers must thereforedecide how to continue differentiating through private label while increasing scale andimprovingeconomics.Exhibit 3:Two waves have impacted the profitability ofretailersFirst waveCentred on buying and selling pricesCOGS1increasesToughnegotiationsSellingpricevolatilityIntensifiedpricecompetitionPublicpressureon prices…Second waveDriven by consumers trading downPrevailingcost-of-livingcrisisPrivate labelentry rangegrowthPrivate labelvolume erosionat top endVolumesslippingdownMarginerosion…1. Costs of goods soldSource: Oliver WymanAll evidence suggests that there is no easy solution to restore margins. Therefore,we suggest addressing the issues heads-on. Our Private Label Playbook includes acomprehensive set of rec