‘It is ending precisely now…’ (Part 2)

This new, 6-part series by Trade magazin and GfK Hungária Market Research Institute focuses on price trends, pricing policies and consumer expectations in terms of price. Last time we called readers’ attention to the fact that purchasing power per person decreased by 15 percent in 2009. One way out of the crisis would be taking out loans, but not only banks are cautious as demand for loans also fell. Another solution could be increasing domestic demand. In the past period, FMCG turnover fell in terms of volume, but in the second half of last year there was also a shift toward cheaper products. A large number of buyers switched from

A brands to B brands or private label products, and at the same time started doing their shopping in discount or discount-type stores. Obviously, private labels’ market share reached 26 percent by early 2010; B brands were at 31-32 percent and A brands’ share lowered to 42-43 percent. In our opinion the growing proportion of private label products has a positive effect on consumer loyalty for a retail chain only at the beginning, and later it might affect loyalty in a negative way.

A perfect example or this is Sainsbury in the UK, where the share of private labels was above 60 percent and consumer loyalty started to fade, as shoppers with a ‘bargain hunter’ attitude also largely contributed to PL sales in other retail chains, instead of buying branded products at Sainsbury. As for promotions: their share was 30 percent in the FMCG sector. In the last two years, the biggest losers were consumer durables.