The Canadian private label sector is no longer confined to cheap, lower quality alternatives to branded products, as Canadian retailers look to appeal to those seeking affordable luxury, according to a new analysis from Euromonitor International.
According to Svetlana Uduslivaia, senior Canada analyst at Euromonitor, retailers are responding to ongoing economic uncertainty – especially among middle and upper-income brackets – with higher quality private label foods and beverages, in an effort to strike a balance between quality and price.
Differentiating these premium and luxury lines centers on packaging design, as well as price and providing a wider assortment of products. In Canada, black labels are strongly associated with luxury items, Uduslivaia claims.
The oldest private label brand in Canada is Loblaw’s President’s Choice, which rolled out a line of super-premium Black Label products late last year, including confectionery, baking ingredients, spreads, dressings, marinades, pastas, sauces, baked goods, oils and vinegars, and spice blends. It aims to appeal to consumers who might shop for basic groceries at Loblaws but turn to specialty boutiques for luxury and gourmet items.
“Consumer reception of the new product lines has been fairly positive thus far,” Uduslivaia wrote – and other retailers have also been developing black label ranges for the premium, luxury market.
Wal-Mart has chosen to market a private label range of black label products, as ‘Our Finest’, with a range of about 200 SKUs. The Life range marketed by Canada’s largest drugstore chain Shoppers Drug Mart has its own black-packaged Life Premium Gourmet line, and drugstore chain Jean Coutu also features a black label range.
Continued growth in premium private label?
Uduslivaia wrote that there are at least two main factors determining whether premium-positioned private label products will continue to appeal in Canada over the coming few years: Firstly, a continuing cautious attitude to spending among many Canadians, and secondly, the expected opening of Target stores in Canada from early next year.
Target’s emphasis on private label products may put pressure on other retailers to maintain their customer base and grow profit margins in order to protect against potential price battles, she said.
Uduslivaia’s full analysis is available online here .