Shoppers at Australia's largest supermarket chains have made an alarming change to their weekly shop amid the cost-of-living crisis.
Throughout the first few months of 2023, shoppers at Coles supermarkets ditched well-known brands selling popular items such as chocolate and instant coffee in favour of own-brand alternatives such as Coles Finest and Coles Nature’s Kitchen.
The supermarket giant reported a staggering 11 per cent increase in the sale of own-brand items, with more than $2.9bn worth of items sold between January and March, while competitor Woolworths also recorded a 2 per cent increase in own products.
The shift comes as shoppers across the country feel the pinch from a worsening cost-of-living crisis, which Queensland University of Technology retail researcher Gary Mortimer said had forced shoppers to make tough choices during their regular shop.
“Where customers might have bought the branded shampoo, they’re now finding an alternative that will suffice,” Mr Mortimer said.
“These sought of own-brand products fulfil consumers’ needs without them having to forgo the entire purchase.”
The shift on store shelves away from popular brands including Coca Cola had been a long time coming, Mr Mortimer said.
He believed supermarkets had for decades invested millions of dollars into improving the quality of their offerings.
“There’s now been a change in shoppers from the perception that these products once had of being an inferior alternative,” Mr Mortimer said.
“The supermarkets have convinced shoppers their private labels are of equal – if not better – quality than the branded products.”
By selling their own-brand products, supermarkets are able lower the price of those items while increasing their profit margin.
Mr Mortimer believed Australian own-brand label products now accounted for as much as 40 per cent of supermarket items.
In Europe, that number is already much higher, with German and Swiss supermarkets selling more than 50 per cent own-brand products.
In the UK, the number of private label products is also already more than 45 per cent.
Outgoing Coles chief executive Steven Cain told investors earlier this year the supermarket chain’s private-labelled products helped increase sales by more than 7 per cent in the first half of 2023 despite interest rate hikes and supply chain issues.
A Coles spokesperson said the supermarket chain had launched 227 privately-branded products in 2023, including bulk chicken breast nugget packs and the Coles Finest lamb range as well as bulk handwash refills.
“With the largest own-brand portfolio in Australia, we remain confident that we are well positioned to navigate the current environment and deliver trusted value for our customers at a time when many households are experiencing financial pressure,” the spokesperson said.
Woolworths Group chief executive Brad Banducci agreed that customers were increasingly looking for more affordable options.
“We understand how important value is to our customers and our own-brand labels and products can play a critical role in providing our customers with choice without compromising on quality,” Mr Banducci said.
“Our essentials range is a solid example of that because it says what it is: It’s a basic essential that you put in the pantry such as flour, rice, sugar, canned fish, sauces, cooking spices and so on.”