At a time when inflation is in full swing, traditional retailers are reluctant to lower their prices, but are implementing aggressive promotional strategies. Not without effects on the price of private labels… which are exploding. A recent study by the consulting firm Circana for the agri-food magazine LSA, reveals how the price difference between private labels and national brands has evolved between the 1st quarter of 2019 and the 2nd quarter of 2023. The study via a graph presents this evolution between 2019 and 2023. There is thus a less marked difference between private labels (MDD) and national brands. Notably because private labels were the first to suffer from inflation, at the start of the year.
According to the evolution of the graph, the consulting firm sees a strengthening of the gap: “After the slight reduction in the first quarter of 2023 (the average price of classic Private Label was 33% lower than that of National Brands), the gap of price between classic private labels and national brands is widening again without completely returning to its pre-inflation level”. This results directly from the strategy of classic brands not to lower prices but to apply offensive promotions. And thus enter into direct competition with private labels. On the graph, in the second quarter of 2023, the price difference is indeed 35%, a little less than the 36% usually observed since 2019, describes the LSA article.
A development to watch, therefore, to confirm this difference over the long term and with the return of accessible prices for private labels. “It remains, of course, to know what will happen in September 2023…”, specifies the article. And know the lasting effects. If retailers continue to lower their private label prices as they are doing now, retailers could widen the price gap with branded products even further. September will probably be the right “period” to understand the emerging trend. And confirm the return of cheaper private label prices.
