Abstract
The practice of creating Private Label by large food chains is a global trend. Such international and Russian retailers as Auchan, SPAR, Prisma, Okay, Lenta, etc. have these products of their own brand. However, this marketing policy is not used by all the players in this market. In the conditions of a protracted economic recession that began in Russia in 2014, even such a seemingly stable sector of the economy as grocery retail faced a decline in its trade. The main reason for the current situation is, of course, a significant, more than 15% in 5 years, fall in real disposable incomes of Russian households. At the same time, for certain groups of households (families with children, single pensioners, etc.), the poverty is still much higher. In such households, expenses for food take significantly more than half of their incomes. The heightened competition of retail chains for a shrinking budget of buyers pushes them to search for new models of pricing policy. This article explores the possibility of using the practice Private Label by food chains.
Highlights
Without doubt, finds itself among the countries most seriously affected by the global economic recession
We present our own approach to the analysis of the private label as a tool for the optimization of the pricing strategy
The use of private label is an alternative way of selling the same food products, yet potentially – a cheaper one in comparison to the traditional mechanism of buying goods from the external suppliers [27, 28]
Summary
Without doubt, finds itself among the countries most seriously affected by the global economic recession. Single-parent family, lonely elderly people, small town and rural citizens etc.) this figure is considerably higher In such households, expenses for food take significantly more than half of their incomes. In the period of a recession, it should maximally adapt to the change in the real income of the population (through creation and development of the loyalty programs) One such effective measure to increase the consumer loyalty, and preserve and even boost one’s competitive position could be the optimization of the trading margin for the high-turnover high-margin goods. If the company develops a private label through the vertical integration, the lowering of prices occurs due to the considerable lowering of the cost of the targetproducts As a result, such products will gain the competitive advantage on the shop floors of the food retailers in the period of recession
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