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Inflation: Buyers are increasingly turning to cheap brands

2022-08-26T05:44:54.260Z


They are called “Yes” or “Good & Cheap”: Own brands from supermarkets and discounters are booming. Recently, the price increases have been particularly high for them.


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Cooling shelf in a Düsseldorf supermarket

Photo: Michael Gstettenbauer / IMAGO

The consumer prices, which have been rising for months, are having an impact on the consumer behavior of people in Germany: Consumers are increasingly turning to the cheaper retail brands and leaving the branded articles on the shelves.

"The private labels are gaining a noticeable share of the market," said retail expert Robert Kecskes from the market research company GfK.

According to him, the particularly low-priced own-brand offers in the entry-level price segment have grown particularly strongly in the past two months.

However, there is a catch: the retail chains' own brands are also becoming more expensive - and the price increases here have recently been even higher than for branded products.

They are called »Ja«, »Gut & CHEAP«, »Milbona« or »Gut Bio«: The own brands with which the retail chains compete with the brand manufacturers.

What once started with a handful of cheap no-name products has now developed into an entire product world.

Own brands have a good reputation

In addition to the inexpensive entry-level brands such as "Ja" from Rewe or "Gut & Billig" from Edeka, with which the supermarket chains want to stand up to the discounters, there are now also many private label offers for higher demands: organic products, veggie and vegan Offers, regional products and premium offers for gourmets.

What they have in common is that they are usually priced below the offers of well-known brand manufacturers.

According to figures from GfK, the market share of brand manufacturers, which was over 59 percent last year, fell to just 56.5 percent in June 2022.

An increase in discount campaigns could not change that.

The brand manufacturers lost billions in sales as a result.

It's a tough slump for branded companies, as they were among the big winners in the corona pandemic.

At that time, many wanted to treat themselves to something at least in their own four walls in view of the closed restaurants and canceled vacation trips and resorted to expensive branded goods in the supermarkets more often than usual.

This gave the manufacturers record sales.

But times have changed.

»The trend is currently towards entry-level private labels.

This is a clear indication of how much uncertainty there is among the population," says expert Kecskes.

According to the "Consumption Monitor Prices 2022" of the German Retail Association (HDE) and the Cologne Institute for Retail Research (IFH), more than a quarter of people in Germany are now very afraid of not getting by with their money.

Producer prices have a stronger impact on cheap brands

In the case of people with a net household income of less than 2,000 euros, it is even almost half.

People are therefore paying more attention to the price when shopping, resorting to special offers more often, going to the discounter more often than to the supermarket or choosing cheaper private labels instead of branded articles.

The change is facilitated by the high reputation that many own brands have gained in the meantime.

According to the “Private Label Monitor”, almost two-thirds (65 percent) of consumers see the retailers' own brands as being on par with branded goods in terms of quality.

And 8 percent even see them as superior.

More than half (57 percent) agree that they are inexpensive.

A good half of those surveyed therefore see the switch to private label as a good way to save money when shopping.

However, there is a catch.

Because the savings opportunities by switching from a branded product to a retailer's brand are no longer as great as they were a year ago.

GfK observed that price gaps "tend to narrow" this year.

Discounters are also becoming more expensive

The trade journal "Lebensmittel Zeitung" recently reported, based on the data pool of the price app Smhaggle, that the price increases for private labels from Rewe and Edeka from January to August were twice as high as for branded products, which have also become more expensive.

Even at the large discounters, the prices of their own brands rose significantly more than those of the branded products on offer.

The development itself is actually not really surprising, said GfK.

"In the case of the on average cheaper private labels, higher costs from production and transport have a greater impact on the prices than in the case of the brands, which are already higher-priced." The increase in special offers for branded articles is also noticeable here.

But in the end, it's still bad news for price-conscious shoppers: private label is losing steam as a last resort in the fight against inflation.

beb/dpa

Source: spiegel

All business articles on 2022-08-26

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