Publication date: June Next publication: January Private Label Report
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1 Publication date: June 2019 Next publication: January 2020 Report
2 What is? There is often confusion around the difference between private label, confined label, dealer-ownbrand, exclusive brand and house brand. These terms are often used interchangeably and sometimes incorrectly. As such, please refer to the below definitions for clarity, the term private label encompasses both. For the purpose of this report, focus remains mainly on private brand. Private Brand Dealer-Own-Brand House Brand PRIVATE LABEL Confined Label Exclusive Brand NEED TO KNOW MORE Private Brand, Dealer-Own-Brand and House Brand: A brand of product(s) that is exclusively manufactured by a contract or third-party manufacturer for a retailer, according to retailer specifications, and sold under a retailer s brand name. Private brand is often tiered according to good, better, best brand positioning, however these tiers are defined differently across retailers i.e. some might refer to premium / national brand equivalent / value or fit for purpose. Globally, certain retailers (i.e. Lidl) are moving towards vertical integration with their private brand products (i.e. owning the factories which private brands are manufactured in). Confined Label, Exclusive Brand: A brand of product(s) owned by a manufacturer or producer but exclusive rights are given to a retailer to be the sole distributor of the product to the market. Let s take you on a journey down the shopping aisles of Clicks, showcasing their most prominent private brand products. Clicks Group Page 2
3 Role of private label To provide a differentiated product offering that adds value through competitive pricing To entrench the trust and loyalty that shoppers associate with the Clicks brand, demonstrated through the ability to transcend product categories and markets Strategy To support the Clicks strategy of being the customer's first choice of pharmacy, health and beauty retailer in South Africa To deliver a competitive and differentiated product offer, at higher margins, through wide ranges of private and exclusive brands and franchise brands To grow front shop sales by increasing private label and exclusive brand sales to 29.5% To grow Clicks private label to 25% of health and beauty sales (currently 22%) To use innovation to increase volume: 300+ Sorbet product lines were added in FY2018 To expand private label scheduled generic medicines range with 34 new products (currently +120 SKUs), as part of the strategy to make healthcare more affordable Contribution of private label Private label contributed 22% to total sales, in FY % of front-shop sales 5.6% of pharmacy sales One in every three front-shop products sold being only available in Clicks (based on volume sales), private-label and exclusive brand penetration is one of the highest amongst retailers in South Africa Private label, exclusive and international franchise brands ensure Clicks provides a differentiated product offer to customers and reinforce our value proposition. David Kneale, Group Strategic Adviser, former Clicks Group CEO Clicks Group Page 3
4 Clicks Private Brands Health and Home PRIVATE BRANDS CLICKS PAY LESS CLICKS ESSENTIALS CLICKS SMART BITE CLICKS SMARTLIFE Shopper Profile LSM 4-10 LSM 6-10 LSM 8-10 LSM 8-10 Strategic Brand Positioning Good (Value) Reliable, no-frills budget basics Trusted alternatives to top brands Reliable basics to alternatives to top brands Reliable basics to alternatives to top brands Distinctive blue Clicks branding with red Pay Less logo range branding with range branding with Distinctive with unique product range branding logo Price Positioning Price fighter Everyday low prices - cheapest on shelf better price better price better price SKUs Essential Items Across Health, Home & Beauty Categories Nutritional Supplements Health Foods Home Accessories Clicks Group Page 4
5 What are the Private Brands in Clicks Beauty & Toiletries PRIVATE BRAND CLICKS AFRI TRUE CLICKS SKINCARE COLLECTION CLICKS INTIMATE CLICKS REVIVE CLICKS SUN PROTECT Shopper Profile LSM 6-10 LSM 8-10 LSM 6-10 LSM 6-10 LSM 6-10 Strategic Brand Positioning Price Positioning Better (Quality) Trusted alternatives to top brands Better (Quality) Trusted alternatives to top brands Trusted alternatives to top brands Trusted alternatives to top brands Reliable basics to alternatives to top brands SKUs Hair Care & Hair Treatments Skincare Range Feminine and Intimacy Care Men s Soaps & Toiletries Sun Protection Range Clicks Group Page 5
6 What are the Private Brands in Clicks Beauty, Toiletries and Baby PRIVATE BRANDS CLICKS CLICKS ESSENTIALS CLICKS OH-SO- PRETTY CLICKS MADE4BABY CLICKS HYGIENE Shopper Profile LSM 6-10 LSM 6-10 LSM 6-10 LSM 6-10 LSM 6-10 Strategic Brand Positioning Reliable basics to alternatives to top brands Variation in branding: standard Clicks to category leader Trusted alternatives to top brands Variation in branding: standard Clicks to category leader Trusted alternatives to top brands Trusted alternatives to top brands Trusted alternatives to top brands Price Positioning SKUs Essential Items Across Health, Home & Beauty Categories Hair Care, Skincare, Home Hair Accessories: children Baby Care Soaps, Hand Sanitisers Clicks Group Page 6
7 What are the franchise and exclusive brands in Clicks? Exclusive Franchise Brands Franchise brands, are available across health and beauty categories, and build on Clicks private brand range, through stand alone stores, as well as a portfolio of products within Clicks stores The portfolio of exclusive franchise brands, namely The Body Shop, GNC, Sorbet and Claire s augment Clicks private label brands in the health and beauty categories Exclusive and Dealer-own Brands The Clicks product range also includes an extensive, complementary exclusive brands range such as, but not limited to: o Homeware: Safeway and Kambrook o Personal Care: OH So Heavenly o Cosmetics: Wet n Wild and Nyx Professional Make-up o Fragrances: Steel & Ice and Enchante o Confectionary: D licious Clicks Group Page 7
8 Strategic brand positioning Feel Good, Pay Less, with shoppers trusting the brand and responding positively to promotions and differentiated product ranges Products have the ability to transcend product categories, taking on market leaders through innovation and price competitiveness Clicks Sun Protection Clicks Made 4 Baby Diapers Clicks Nutritional Supplements Clicks First Aid Clicks Group Page 8
9 Price Positioning Price Fighter (Good) and Value for Money (Best) vs. Market Leader Positioned as a value retailier, Clicks invest aggressively in price relying on markdowns and promotional specials to drive sales and volume growth The value of the 3 for 2 promotional strategy is very attractive to shoppers Value for Money (Best) Price Fighter (Good) Market leader R35.26 per 500 ml on 3-for-2 promotion R29,96 per 500 ml on 3-for-2 promotion = below 50% of market leader price per volume R64,99 per 500 ml (no promotion) Note: pricing as at Clicks Group Page 9
10 What media platforms are used to communicate Clicks Private Brand Print Website Clicks private brand features in the Clicks ClubCard magazine, broadsheets (in-store and newspaper), online and in-store promotional catalogues Clicks private brand features across categories and forms part of various promotions and discounts within these categories, such as price off, bulk offers, 3-for-2 and mix & match. Social Media Facebook showcases Clicks private brands within value promotions 1,014m followers (May 2019) Twitter posts feature beauty offerings from Exclusive and Franchise brands. Clicks private brands feature within select value promotions 163k followers (May 2019) Clicks Group Page 10
11 What s going on in-store? Private Brand blurring Market Leader Brands Clicks private brand competes with market leaders in general and niche categories, mimicking colour coding, packaging shape and label artwork, at markedly reduced prices Private Brand Owning Sub-categories In the personal care category, such as hair accessories, Clicks private brand and exclusive franchise brands dominate, with no branded product competing on shelf Clicks Shampoo, Feminine Care, Magnesium and Baby Wash next to market leaders in the respective categories. Private & Exclusive Franchise Brand Hair Accessories Clicks Group Page 11
12 Maryla Masojada Lead Analyst Andrea du Plessis Associate Analyst
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