Philippe Lejeune, the chief executive of the Cora Romania hypermarket chain, says the plan is to have private labels account for 25% of the company’s sales within five years. Cora’s private label sales currently stand at EUR40 million, up from previous years.
Winny (lowest price), Cora (medium price) and Traditia Gusturilor (Tradition of Taste – premium products) are 10% cheaper than established brands.
The French executive had previously said that in the developed markets, private labels might contribute as much as 25% to the sales. He is certain the same may happen in Romania, provided that the products, which attract clients, are found.
Private labels are on the rise and they reached 9% of the total FMCG market in 2011, compared with 7% in 2010, according to GfK data. This market has constantly increased over the last few years, as price became to main factor in a purchase. Still, the potential remains because the share of private labels in total consumer spending is lower than in Eastern Europe, where it is close to 20%, GfK officials said.
Private labels had reached 28.1% in Hungary, exceeded 21.2% in Poland and 19% in the Czech Republic by 2010.
The latest data about the local market, which includes both traditional and modern retail is 2010 data, when it was valued at EUR16 billion. With private labels accounting for 9% of the market, their sales should have reached EUR1.44 billion if the market remained relatively constant in 2011.
GfK officials say that the development of private labels is hindered by the Romanian consumers’ brand loyalty, so that personal care, detergent or soda drinks private labels’ sales volume is very low.
Best-sellers among private labels are foods such as vegetable oil and paper products – kitchen towels, napkins and pocket tissue, according to GfK data.
Retailers say that consumers in this country mainly choose private labels when it comes to food, but have gradually started to warm up to non-food products such as apparel. Under the circumstances, Carrefour and Cora launched their own lines of such products.
Other retailers, such as Billa, rely on foods and cosmetics, because the chain does not carry as wide a range of products.
Clever (foods) and My (cosmetics) currently account for more than 10% of Billa’s sales, and their share in the total has been on the rise. The company has recently introduced the Billa private label (upper medium segment), largely used for foods.
Carrefour Romania’s boss Francois Melchior de Polignac says private labels used for foods and non-food products are contributing 12% to total sales. Since Carrefour’s revenue in Romania exceeds EUR1 billion, more than EUR120 million come from sales of Carrefour, Marca 1, Reflets de France and Tex.
The GfK survey says that 95% of the country’s households have tried private label products on a market equally divided between modern and traditional retail.
(English version by Loredana Fratila-Cristescu)