Private labels in Australia: A case where retailer concentration does not predicate private labels share

Abstract

Researchers suggest that private label penetration is due to the degree of retailer power over suppliers and the level of retailers’ concentration (Tarzijan, 2004). While true for some countries, this is not the case in Australia, where the retailer concentration is one of the highest in the world (two retailers hold 74 per cent of the grocery market) and private labels account for only 24 per cent of supermarket sales. The aim of this article is to investigate additional factors besides retailer concentration, such as retailer strategies towards their private labels that may explain this exception. A detailed examination of the marketing activity and diversity in pricing and branding strategies in two countries, Australia (low private labels penetration) and the United Kingdom (high private labels penetration) has been undertaken. This involved in-store observations, price comparisons and a literature review. The findings show that the marketing strategy of Australian retailers is very different from British retailers. Private labels are rarely promoted, and are positioned as cheaper alternatives to national brands. This highlights the other factors, such as retailer commitment and marketing activity that may distinguish between countries with different private label penetration.