Following his time at Coles, he is now the Founder and CEO of Prof. Consulting Group.
According to Mr Field, there continues to be significant opportunities in private label for supermarkets. Only last month both Coles and Woolworths flagged a reinvigoration of their house brands as part of their growth strategy to offer consumers value.
“If you look at the global benchmark data the Australian market is making progress but there’s still significant headway to be made to where the true potential is,” Mr Field says.
“Seven or eight years ago Coles and Woolworths were in the mid-20 per cent mark from a penetration perspective whereas now they’re above 30 per cent so they’ve made major inroads.”
“I think 40 per cent is achievable in this market if you’ve got the right supply base and the right sourcing strategy – Sainsbury’s in the UK is reportedly above 60 per cent.”
The narrative across retailers moving to own brands rather than house or private label is a small but significant change in how they view product ownership and growth opportunities.
The attraction of a successful private label offering to supermarket operators goes beyond attractive margins – it enables differentiation and creates a compelling reason for customers to elect where to shop in a competitive market.
“You’d expect private label margins to help your business grow – you’ve got significant volume that enables you to offer the customer a range of tiers, so, you can have a very good quality entry product or you can have a really great quality premium product depending on the customer needs -and that ultimately helps drive profitability,” Mr Field says.
“Success and growth are about delivering customer-focused solutions.”
As recently as a decade ago supermarkets would develop products and push them into the market whereas now it’s about understanding what consumers want.
“Convenience, health and wellness-related alongside plant-based products continue to be high growth areas for brands and
private label across retail, driving innovation into those categories to meet the growing demand and the next great food product is where the value really sits.”
“As consumers demand more premium food in key categories such as dried pasta, olive oil or organics as examples we are seeing the traditional discounter in this market Aldi delivers more award-winning products and new product positioning as they look to meet the changing needs of the market – could this evolution create a future opportunity for a hard discounter to enter the Australian market?”
“What we are seeing is that move away from very low-cost food to more mid-tier and premium products, whilst having a competitive low-cost offer across staples remains important.”
“In the UK with Mere – owned by Russia’s Svetofor supermarket chain – it has gone in with its operating model and it’s gone cheaper than cheap or closer to home and then there’s the domestic success of The Reject Shop.”
In the meantime, Mr Field is keeping his eye on supermarkets’ fulfilment and delivery models. Coles is about to go live with the Ocado centralised distribution model. On the other hand Woolworths is trialling the micro fulfilment model which relies on networks of neighbourhood stores.
“They’re trying to get the product to consumers, but they’re trying different methods to see which works.”
With Q-commerce grocery deliverers such as Voly and MilkRun entering the market, the major retailers are needing to consider faster delivery times as part of their strategy.
“I don’t think it’s a key aspect of short-term profitability but there are so many ways and so many places now that consumers can shop – it’s just become a very, very competitive.”
Figure 1: Coles supermarkets’ market share
This article was originally published by Field Research including being featured across their publications and online at www.fieldresearch.com.au