Private Label

An interview with Dorota Kałowska, Polish Chamber of Commerce expert about the development of private labels in Poland.

Thursday, 18 June, 2015
The subject of private labels still gives rise to various emotions, both among producers and commercial networks. In your opinion, will private labels continue to develop this dynamically in Poland?
The private label market in Poland continues to develop at a great pace and, in my opinion, this trend will be maintained. Obviously, in a long-term perspective, this dynamics will decrease because of several factors. Firstly, we are already dealing with a change in the discount networks’ strategies which, are trying to reach an increasingly demanding customer with their offer, bringing in more brand products to their units. Therefore, the sale of private labels per shop decreases, the discount shops are a format which play a significant role in the structure of Polish commerce.
On the other hand, however, most commercial networks, regardless of their original positioning (discount, super-, hypermarket or delicatessen), are beginning to develop their Premium product offer. This is a natural consequence of maturity in our market and here I would foresee another reason for the continued growth of the private label segment in our country.
A very interesting phenomenon is also the intensive development of the “convenience” channel, offering full customer service in a single place, near the customer’s home. Will this trend have any effect on the development of the private label? Definately yes. The fact that the Polish customer has turned towards “convenient stores, near their home” is a phenomenon that the networks will attempt to use as effectively as possible, for example by introducing private labels of high quality to their offer.

What is the basis for success of the private label?

Polish people assess the offer of private labels more and more positively. Already, almost 40% of customers declare that the quality of private labels is improving. What is interesting, the percentage of persons indicating that private labels are cheaper from brand products (44% in 2014 vs 56% in 2013)* is decreasing, we perceive the private label offer as products of full value – a really good alternative for the national brands. This is a result of at least two factors. Firstly, the commercial networks have made a lot of effort in the recent years to improve the quality of their private labels, both at the level of products themselves as well as their packaging and exposition. All standards and continuous monitoring of the quality of private labels have given the customers a reason to trust and be loyal to the network offer.
The Polish customer is more demanding, aware of his needs and purchasing power. We have the highest shopping IQ in Europe. This, however, does not mean that we are looking for the cheapest offers, no matter the cost. The “smart customer” is interested in the best quality to price ratio, where the well-conducted private labels are a perfect alternative to the brand products. Interestingly, the commercial networks are beginning the process of building strong brands (both at the level of the entire network as well as own private labels), engaging into brand-typical marketing activities – image campaigns, social media, brand dedicated expositions or high quality packaging. Therefore, the private labels in Poland cease to be only a cheaper equivalent of brand products, they take their own spot in the customers’ minds. The development of the Premium offer among private labels will surely only strengthen this trend.

In your opinion, what are the development perspectives for small and medium companies connected with private label production?

There are multiple advantages connected with the production of private labels as well as risks resulting from it. It is impossible to fully discuss this subject in such a short form of expression. I would like to, however, bring attention to one thing. Cooperating for many years both with suppliers as well as commercial networks, I observed that both parties cooperate with each other on an increasingly closer basis. In the atmosphere of dialogue and a common search for solutions (which used to be a very rare thing until recently), there are really interesting products created under private labels. The networks expect innovation from the suppliers, they are ready to respond quickly and provide suppliers with the distribution to which smaller players would have much more difficult access. Iwould indicate this cooperation in the atmosphere of dialogue as the greatest challenge, but also an opportunity, both for the suppliers as well as owners of private labels – both parties should be interested. If, both producers and networks, really make all effort to look for the most interesting (for the customer) offer together, private labels have a chance to continue their dynamic development in Poland and surprise us more than once.

tagi: Dorota Kałowska , interview , private labels ,