By Max Oliva, SPAR Southern Africa CEO

In times of economic uncertainty, retailers must do more than simply meet demand - they must anticipate it, shape it, and lead it.

Across the globe, private label products have evolved from being budget alternatives to strategic tools for customer retention, brand differentiation, and economic inclusion. In South Africa, where the cost of living continues to climb and brand loyalty is being redefined by value, quality, availability and affordability, the private label opportunity has never been more urgent – or more promising.

Analysis by NielsenIQ during the COVID-19 pandemic has revealed that private label goods commanded a remarkable 24.3% of total basket value sales in South Africa, amounting to R71 billion annually. Consumer intelligence group NIQ predicts this figure is set to surpass R100 billion within the next 6-12 months.

According to Euromonitor International, a substantial portion of consumers who purchase store brands for the first time tend to continue using private label goods. The 2022 Voice of the Consumer lifestyle survey noted that 21% of global respondents plan to increase their purchases of private-label products—the highest level recorded in the past six years. It is unsurprising that private-label sales have experienced a 30% growth worldwide since 2020.

SPAR Southern Africa is positioned to capture a large share of this market, targeting 28-30% of sales from in-house brands over the next three years. This ambitious growth will be driven by competitive pricing, a tiered product range to suit all budgets, and a steadfast commitment to quality that rivals national brands.

At SPAR Southern Africa, we believe the future of retail is not just about what’s on the shelf, but how we innovate to meet people where they are. Currently, private label products represent 23% of our sales, and we are committed to expanding this by offering solutions tailored to all tastes and budgets - delivering on our promise of ‘as good as the best for less’.

SPAR’s private label strategy over the past year reflects this ambition and we plan to accelerate this progress over the next few years. A reinvigorated strategy includes:

• Signature Selection:A top-tier range of products for the discerning shopper.
• SPAR:A mid-tier range focused on delivering value.
• SaveMor:A budget-friendly option for price-sensitive shoppers, ensuring affordability with acceptable quality.

With rising living costs and job insecurity set to accelerate due to geopolitical uncertainties and the VAT increase, SPAR is gearing up to lead the private label market, addressing a critical need for quality and affordability by cash-strapped consumers.

In rural communities, which account for nearly half of our business, we intend to drive local growth through our SaveMor store and product brands. Approximately 90% of our private label products come from local suppliers rather than large corporates, making this a powerful driver of economic upliftment and opportunity. With our ongoing commitment to sourcing, supporting, and strengthening local businesses, we aim to increase our private label brand sales, in and out of our SaveMor stores, to serve our retailers and shoppers better.

By continuing to support entrepreneurs, farmers, and suppliers throughout the supply chain, we will continue to drive job creation across the country. Optimising supply chain efficiency by collaborating closely with manufacturers on accurate forecasting will aid supplier planning and raw material procurement. We will also utilise The SPAR Group reverse logistics assets on return vehicle delivery legs to improve efficiency and reduce transportation costs – enable us to pass off savings to shoppers where we can.

For the high-end market, our bespoke gourmet offering set to launch later this year, alongside our SPAR Signature Selection private label product range, will underline SPAR’s dedication to excellence across all market tiers.

Achieving success will require focus, an innovative mindset, determination and being “always on”. Strong supplier partnerships are also critical to the success of any private label programme. This fosters long-term, personalised relationships with suppliers through collaboration on innovation and cost-saving strategies to drive value.

With these strategic initiatives in place, businesses can strengthen the private label market while providing quality and value to shoppers. SPAR believes it has the right strategy to build on the significant private label momentum and demand we are experiencing.

Whatsapp