House brands a hit

Supermarkets report jump in sales as higher-income shoppers switch brands
Jan 20, 2009
By Jessica Lim (Straits Times)
HOUSE brands are flying off the shelves at record speed as the recession bites deep, and even better-off households are increasingly turning to them.

Though the most popular items include staples and necessities such as rice, bread, cooking oil and toilet paper, supermarkets are catering to increasing demand by packaging everything from wine to olive oil under their brand names.

The Straits Times' checks with major supermarkets here found that sales of house-brand items such as rice had as much as trebled in the June-December period last year, compared to the same time in 2007. Overall, they said, sales of house-brand goods rose 50 per cent during the same period.

And with the economic outlook for the next few months - at least - looking increasingly gloomy, they say such items will only grow in popularity.

The supermarkets said the bulk of the increase in sales is due to demand from higher-income shoppers.

A Sheng Siong spokesman said that marketing surveys and feedback have shown that 'higher-income levels are more receptive towards house brands'.

Cold Storage said it has also observed a change in shoppers' behaviour.

The supermarkets think the shift is due to the 'improved perception and acceptance of house brands', a wider range of products, and improved quality.

The results of a Nielsen survey of 1,000 households also pointed to a similar change in habits.

It showed that of the 280 households with a combined income of at least $6,000 a month, 71 reported buying house brands in the June-November period, compared with 60 for the preceding six months - an increase of about 19 per cent.

This group registered the largest jump in house-brand purchases in the survey period.

A retail management lecturer at Ngee Ann Polytechnic, Ms Emiline Lee, said: 'In the past, those from the higher-income strata would not even look at house-brand products. But now, they are willing to switch. They realise they can save money, and that house brands are of higher quality as well.'

Buying such products can lead to big savings, she explained.

Going the generic route with staples such as rice, oil and toilet paper alone can shave as much as 20 per cent off a typical family's grocery bill.

On average, house-brand items are 15 per cent cheaper, but the difference can be much, much more. Ten rolls of FairPrice's brand of bathroom tissue, for example, costs $3.82. The price of 10 rolls of Kleenex is almost double that, at $7.50.

Consumers - both the less well-off as well as middle-income - who spoke to The Straits Times said they now actively seek out house brands.

'For me, it does not make a difference. Some items you use a lot very quickly so you don't need luxury versions,' said Ms Leena Sumukhan, 33, a working mother of two whose monthly household income is $8,500. Switching to house brands for items such as bread and pasta, she said, saves her about $30 every fortnight.

For housewife P.H. Ho, 33, saving money comes first.

The mother of two, whose husband takes home $9,000 a month, turned to generic washing powder and toilet paper last year. 'The priority now is to save money,' she said.

Meanwhile, because of surging popularity, supermarket chains are adding more products to their house-brand range.

FairPrice has plans to extend its range of housebrand products from the current 2,000 to 3,000 by 2012, and Cold Storage is going to introduce 20 per cent more products to its current 1,600 product range this year.

Sheng Siong, which now has about 20 house-brand items, will extend its range to include oil, frozen food and condiments.

limjess@sph.com.sg

Additional reporting by Cheryl Ong

Survey shows more high-income households turning to house brands
By Cheryl Frois, Channel NewsAsia
19 January 2009 2108 hrs

SINGAPORE : Amid the deepening recession, supermarket house brands or private labels are growing in popularity, with high-income households making the biggest switch among all income groups.

Such households, with a combined monthly income of over S$6,000, now make up over 28 per cent of all house brand buyers.

Together with middle-class households - which have a combined income of over S$4,000 - they account for 49 per cent of all house brand consumers.

A market survey by The Nielsen Company shows that staples such as rice, bread and cooking oil, and paper products like toilet rolls and facial tissue, are the most popular items.

Described as a never-before-seen phenomenon, the survey found that the penetration of house brand products now stands at 91 per cent, with over nine in 10 households having bought at least one of these items in the six months ending in November last year.

Nielsen also said overall spending and purchasing frequency of house brands also grew in the same period. - CNA/ms