High energy prices, supply chain problems and inflation: Life in Germany has become significantly more expensive. Food and non-alcoholic beverages cost 14 percent more in July than in the previous year, according to the Federal Statistical Office. More and more people have to pay attention to every cent. This is now having a major impact on shopping behavior.
More and more often, consumers are turning to the cheaper own brands of retailers and leaving the branded items on the shelves. “The retail brands are gaining noticeable market share,” said retail expert Robert Kecskes from the market research company GfK of the German Press Agency. However, there is a catch: the retail chains’ own brands are also becoming more expensive – and the price increases here have recently been even higher than for branded products.
The own brands, with which the retail chains compete with the brand manufacturers, are called “Yes”, “Good
In addition to the inexpensive entry-level brands such as “Ja” from Rewe or “Gut
What they all have in common is that they are usually priced below the offers of well-known brand manufacturers. And that they are gaining popularity at the moment.
While sales of everyday goods fell by three percent overall in the first half of 2022 compared to the same period of the previous year, sustainable items even increased by 1.2 percent. Within the market for sustainable products, however, the gap is widening.
This is evident, for example, in the case of packaged organic food. Manufacturer brands lost nine percent of sales here, while lower-priced private labels increased by the same amount. In the case of natural cosmetics, according to GfK, manufacturer brands lost 13 percent in the first half of the year, private labels increased by six percent.
According to figures from GfK, the market share of brand manufacturers, which was over 59 percent last year, fell to just 56.5 percent in June 2022. An increase in discount campaigns could not change that. The brand manufacturers lost billions in sales as a result.
But the shift in consumption is not only affecting brand manufacturers, it is also affecting retailers. “The specialist markets for high-quality sustainable products are suffering particularly badly,” says Kecskes. According to GfK, sales in health food stores and health food stores fell by 39.1 percent in the first half of the year. Organic supermarkets lost 16.5 percent.
This is in stark contrast to the record year 2020, when sales of organic food rose sharply overall. They increased by 22.3 percent to almost 15 billion euros, according to the Federal Organic Food Industry. Consumers were unable to travel at the time, restaurants were closed and food budgets were correspondingly high. A sustainable lifestyle has also become increasingly important in times of Corona and climate change.
The drop in demand has also hit the supermarket chain Superbiomarkt, which had to file for insolvency under its own administration at the beginning of August. “We clearly sense that many consumers are more cautious,” said owner Michael Radau. Customers are paying more attention to the price again.
Many unpackaged shops that sell high-quality organic products for self-filling are also suffering from the austerity wave. Original Unverpackt, one of the pioneers in the industry, is insolvent in Berlin. Two Hamburg stores also had to file for bankruptcy at the beginning of July.
“The current trend is towards entry-level private labels. This is a clear indication of the level of uncertainty among the population,” said Kecskes. According to the “Consumption Monitor Prices 2022” of the German Retail Association (HDE) and the Cologne Institute for Retail Research (IFH), more than a quarter of people in Germany are now very afraid of not getting by with their money. In the case of people with a net household income of less than 2000 euros, it is even almost half.
People are therefore paying more attention to the price when shopping, resorting to special offers more often, going to the discounter more often than to the supermarket or choosing cheaper private labels instead of branded articles.
The change is facilitated by the high reputation that many own brands have acquired in the meantime. According to the “Private Label Monitor 2022”, almost two thirds (65 percent) of consumers see the retail brands’ own brands as being on par with branded goods in terms of quality. And eight percent even see them as superior.
More than half (57 percent) agree that they are inexpensive. A good half of those surveyed therefore see the switch to private label as a good way to save money when shopping.
However, there is a catch. Because the savings opportunities by switching from a branded product to a retailer’s brand are no longer as great as they were a year ago. GfK observed that price gaps “tend to narrow” this year.
The trade journal “Lebensmittel Zeitung” recently reported, based on the data pool of the price app Smhaggle: “According to the evaluated receipts from Smhaggle users, Edeka and Rewe lowered the prices of their own brand products in the entry-level price segment “Gut
