Supermarket Home brand products flourish amid cost-of-living crisis

The landscape of supermarket-owned brands in Australia has undergone a significant transformation in recent years. Once known for basic, budget products, these brands have now adopted a more premium, sophisticated look that often goes unnoticed as being owned by the supermarket. This transformation has occurred as a result of steady investment by major grocery giants, who have invested in developing their product lines to appeal to a broader demographic of consumers.

In today’s cost-of-living crisis, where rocketing inflation and rising mortgage rates are making it difficult for consumers to make ends meet, shoppers are increasingly opting for value-friendly items that offer more bang for their buck. This has led to a surge in sales for exclusive supermarket-owned brands, which have seen an 11.4% increase in sales at Coles and a 9.1% increase in sales at Woolworths in the three months to March.

The success of these exclusive brands can also be attributed to the focus on quality and the development of unique products at a higher price point. While home brands were once associated with the most budget-conscious shoppers, grocery retailers are now generating significant traction by creating speciality meat ranges, toiletries, and home goods that appeal to a broader demographic.

Furthermore, the rise of exclusive private labels has become increasingly important to retailers both inside and outside the grocery sector. The launch of discount grocery chain Aldi in Australia in 2001 helped drive this progress, demonstrating that it was possible to deliver value-focused products that shoppers would often choose over more premium brands. This change in focus means that home brand products are no longer the domain of only the most budget-conscious shopper.

Interestingly, Australia’s growing affection for home brands is not limited to supermarkets. Retailers such as discount department store Kmart have also experienced significant success with their Anko product line, so much so that the company is now exporting the line globally.

Despite the success of exclusive supermarket-owned brands, experts believe that major supermarkets will continue to place a high value on products from external suppliers. Developing a strong, value-conscious portfolio of own brands is primarily a way for supermarkets to differentiate themselves and build loyalty with shoppers, rather than a means to encourage customers to buy everything private label. Ultimately, retailers need to have a drawcard that entices shoppers to buy from them over their competitors.

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