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Slovak Retail Market after Players‘ Trade-off

Power of private labels in the Slovak retail business

Bratislava, August the 18th 2005 – Consumer Tracking /Household Panel/department of GfK Slovakia takes a closer look at the impact of discount stores arrival to the Slovak market as well as progression in the sphere of private labels within the updated study, which monitors and evaluates the development of the Slovak market and also impact of the aforementioned discounts‘ arrival.  The continuous research was conducted on the sample of 1500 households in the period including the second quartet of months of discounts‘ operation in the Slovak market, i.e. January – April 2005.

Private labels development after the arrival of a new discount chain to the Slovak market 

Arrival of a new player has to a certain extent turned the tables within the Slovak retail. In the monitored period September – December 2004, it became evident in significant growth of private labels purchases. Total growth of the purchases expressed in numerical value was 314 % when we compare the years 2004 vs. 2001.

Private labels expenditures‘ growth was also accompanied by increase of their portion of total purchases, specifically to the detriment of branded products; this one-year trend continued also in comparison of the four-month periods of 2004 and 2005. Thus, in the period of January – April 2005, private labels reached the 18.3 % share from the household expenditures point of view.
This trend was determined by wider range of private label products on one hand and also by change of shoppers‘ attitudes to the private labels on the other.

Slovak Customer vs. private labels

Private labels are not perceived as low-quality product by the Slovak households (such a negative perception would be evident mainly in a notable difference of private labels‘ purchases in lower and higher income categories), but they are rather perceived as goods produced by a common, usually domestic producer for the respective retail chain, only in a different packaging and sold at a lower price.
Private labels had the strongest position in durable milk, soft drinks, sponge, juices, and ginger bread. In a year-on-year comparison (1-4/05 vs. 9-12/04) the most remarkable growth of private labels has been recorded within the following areas: salty snacks, sterilised vegetables, muesli and cereal bars, cereals, and mould cheeses.

Positive trend in the private labels‘ market can be expected also on the basis of wide variability of the already addressed customers, high share of Slovaks, who closely follow prices of products, make use of price promotions, and sales and like trying out new products.

Consumer Tracking Department of GfK Slovakia expects growth of purchases in the sphere of private labels since the Slovak households perceive retail brands positively. The customers‘ relation to retail brands has dramatically improved in 2004 compared to 2003 and a similar development can be expected in 2005.

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