The pandemic sorted many industries into winners and losers. In some ways, soaring inflation strikes more fairly: it makes everyone a loser. In the end, as usual, consumers and private households are hit the hardest, as they are forced to hold onto their pennies.
In a shorter perspective, this means that the "wear and throw away product" will no longer fit in the shopping basket. In a longer perspective, a strategic change awaits where established players who want to take market shares and increase margins will bet even harder on their own brand goods, private labels.
The potential for private labels is also great in the Swedish market. We are close to Europe's jumbo location. In England, for example, the market share for private labels is over 50 percent, while the corresponding figure is 20 percent in Sweden.
There has already been a change in the view of private labels among Swedish consumers. Consumer surveys and sales figures confirm that private labels are no longer seen as "cheap copies of famous brands". It also strengthens the private labels manufacturers in their continued investment in broadening their range and testing new segments. It also opens up for new private label concepts that don't just copy the market leader and focus on price.
"For established brands that are now challenged by a rapidly growing private label market, it is more important than ever to communicate quality"
For established brands now challenged by a rapidly growing private label market, it becomes more important than ever to communicate quality that translates into and solidifies long-term brand loyalty.
There is also no doubt that quality pays off. Our surveys and laboratory tests show that consumers' willingness to buy increases by double digits when the quality is ensured by a credible and independent third party.
This also applies when we conduct benchmark studies where a mix of well-known brands are pitted against private label products. Private labels that can compete with both price and quality will be a double winner in the eyes of the consumer. For the same reason, quality is also becoming increasingly important for the major private label producers.
For traditional brands facing tougher competition, all of this is a clear signal that you need to get even better at communicating characteristics that are measured in terms of quality and sustainability.
Worse times not only mean that consumers hold onto their pennies tighter, they also evaluate more and more carefully what they are getting for their money.
Klaus Hahn, CEO at Testfakta Research Nordic