Mind The Gap

As the growth of discounter retail across Europe continues to be a key focus of the mainstream food retailers, International Private Label Consult (IPLC)’s latest research identifies a continuing closure of the price gap with varying strategies being adopted across the retailers.

In its new report, Mind the Gap – Retailers across Europe continue to close the price gap with the Discounters, IPLC analysed the private label architecture and pricing strategy of 16 retailers in 8 countries. The research took Lidl as a representative from the discounter market and compared findings against IPLC’s previous 2016 research, Retaining Consumers Tempted by the Discount Model.

IPLC concluded that many more retailers are actively seeking to reduce the price gap between them and the discounters. They are not simply reducing their prices but are adapting their private label architectures.

The result of all of this activity has seen the price gaps of standard private label close. Compared to the national brands, standard private label is 47% cheaper, a significant shift from 2016 when it was 33% cheaper. The average price gap between Lidl and the national brands has remained almost the same at 55% cheaper (54% in 2016). The combined effect sees a significant reduction in the price gap between retailers’ private label and Lidl from 21% in 2016 to now only 8% (across a selected range of products).

This noticeable increase in the use of private label to combat the discounters bodes well for the future growth of private label volume share in all European markets.