Own-Brands : An Investigation into their Development and Potential in the Irish Grocery Market
Date of Award
Master of Business (Research)
Mr. Michael Walsh
The title of the thesis “Own-Brands - An investigation into their development and potential in the Irish Grocery Market” illustrates what the thesis hopes to explore.
The overall value of the own-brand market is approximately £350 million, which represents almost 17% of total grocery expenditure in the Irish market. The last few years have seen a resurgence of own-brand with major Irish owned grocery retailers shifting from primarily low cost no frills staple goods to a focus on quality marketable goods at value for money prices, to rival the brand leaders in their respective categories and to compete with the new UK entrants with their high own-brand penetration trend.
Own-Brands are sourced from a combination of large and small manufacturers and own-brand specialist companies. The size of the retailer has an effect on the selection of the supplier used while the majority of consumers feel own-brands are made by well- known manufacturers. Retailers are reticent when questioned about what proportion of their own-brands are Irish produced, however Irish owned retailers tend to source a higher percentage of own-brands from Irish suppliers than their UK competitors.
Own-brand penetration in Ireland varies greatly between product categories. High own-brand categories tend to be those with minor manufacturer promotional activity, usually combined with low quality standards and infrequent technical improvements. They are also in most cases, areas of low advertising and marketing spend. The single most important attribute for retailers when selecting product category to enter with own-brands is volume. Retailers do not develop own-brands where category revenue is so small that the development costs would not be repaid.
The entry of UK multiples like Tesco has resulted in the introduction of larger amounts of own-brands many of which are high quality, innovative ‘value added’ products. Large quantities of these tend to be imported with the trend also being to source their products from smaller groups of suppliers. Such a strategy results in large numbers of suppliers being delisted. A similar fate awaits some Irish distributors as UK multiples begin dealing direct with international brand manufacturers therefore deleting the need for middlemen.
The study involves interviews with supermarket executives and a consumer survey. The consumer questionnaire was administered by personal interview, and was completed on a door-to-door basis, by the principal grocery shopper in the household. The survey attempts to establish the impact that retailer’s policies in relation to own-brand have on consumers’ current purchase decisions and outlook as well as establishing who in the household is the own- brand user.
Results from the survey revealed that the majority of consumers perceive own-brands to be better than manufacturer brands in terms of price, and as good in quality. Consumers believe own-brands are produced by well-known manufacturers. Respondents claimed to choose Irish made groceries whenever the choice was available, but their lack of knowledge of origin undermined their stated commitment. While 79% of consumers surveyed had purchased own-brands the majority’s purchases accounted for less than ten per cent of their groceries. Certain product categories (especially high volume commodity type products) are more likely to be own- brand dominated than others are. Own-brand purchasers are more likely to be young, from ABC socio-economic groups and larger household sizes. Consumers are willing to try new innovative own-brands but a price premium on such products may be a deterrent.
The future of own-brands at present looks promising with experts predicting growth in the future. There are plenty of growth opportunities with retailers extending them to more sophisticated lines. The metamorphosis of own-brands is set to continue and be expedited by the entry of UK multiples, who are expected to develop further ‘fourth generation’ own-brand products in the near future.
O'Connor, Mary Patricia, "Own-Brands : An Investigation into their Development and Potential in the Irish Grocery Market" (1999). Theses [online].
Available at: https://sword.cit.ie/allthe/534