Private Labels - A Study of the Development of Private Labels on the Fast-Moving Consumer Goods Market

Abstract

The Fast-moving Consumer Goods Market (FMCG) is characterized by the competition between private labels and national brands. Private labels are a global phenomena, but the private label market differs between nations due to various market conditions. This thesis aims to study the motives, triggers and challenges affecting the development of private labels on the Swedish FMCG markets, as well as the private labels strategies used. The empirical data has been collected by qualitative interviews with Sweden’s three largest FMCG companies: ICA, Coop and Axfood, as well as Swedish and European market studies. Future private label development trends on the Swedish market have then been identified and analyzed. The study shows that main motives for private label introduction on the Swedish market today are to fulfil customer needs, and increase the retailers’ power in the value chain. Triggering factors have proven to be food- and health trends, as well as a high market concentration. The main challenges for private label retailers are quality assurance, customers’ perceptions of private labels in relation with national brands, and vertical challenges such as how to work with private labels on store level. Furthermore, the study found that retailers now and in the future will focus on providing the customers with unique offers, by differentiated products ranges, and by filling out unsaturated consumer needs. In addition, the study suggests a circular relationship between the traditional chains' private labels, new food- and health trends and hard discounters’ establishment in the Swedish market. Finally, the study observed a wider view of the competition on the market, where FMCG companies compete with the service sector in terms of “share of stomach”.