Can own label make its mark?

Convenience stores are "the home of brands", claimed Landmark Wholesale MD Martin Williams in a rallying cry to suppliers three months ago. "If you search the Tesco website for a branded product, its own-label or tertiary equivalent will pop up. That's what they are doing to your brands. Remember who your loyal customers are."

It's a piece of advice that Williams himself has heeded - though in a rather different way. While Landmark still boasts a 95% branded offer, it, like many of its independent cousins, is planning to dramatically increase its own label offer. Last month alone, Landmark added an energy drink to its stable of more than 2,000 own-label products, Booker expanded its value range Euro Shopper from 30 to 35 lines, Bestway launched a range of 14 cooked meats and cheese lines under its Best-In label and Musgrave GB launched a Great Value range across Budgens and Londis.

The recent burst of activity marks a dramatic change in tack for a sector that aside from a few well-established own-label lines such as Happy Shopper and Spar, could claim that up to 99% of its offer was branded. So what's behind the u-turn, is the strategy sound and what further initiatives can we expect?

The timing for the sudden proliferation of own-label brands amid the Coca-Cola bottles, Walkers crisps packets and Heinz baked beans cans, is clearly no-coincidence. As the nation looked down the barrel of recession last year, the multiples all ramped up their own-label offers, particularly at the value end of the spectrum. In order to compete effectively, stocking a credible own-label range has subsequently become a necessity rather than a choice for independent retailers, say experts. C-stores have had to move to keep up with consumer demand, says Him! director Tom Fender. "The c-store sector was very much about brands but this may be changing," he says.

Shoppers now demand a choice of own-label goods in c-stores, agrees Nick Brown, who is responsible for Bestway Cash & Carry's 700-strong Best-In range. "Customers vote with their feet and their money," he says. "The consumer has the final say, and it is the commercial responsibility of all independents to provide greater choice."

Shoppers are increasingly turning to c-store own-label lines for daily essentials. Booker, which has a 35-strong Euro Shopper range and the 600-strong Happy Shopper label, sells a million cans of Euro Shopper Energy Drink and 12,000 packets of Happy Shopper custard creams a week.

The bestselling lines under Landmark Wholesale's Lifestyle label include toilet roll, orange juice and vegetable oil. Bread, tinned tomatoes and vegetable oil are top sellers for Best-In, while Spar estimates it will have generated sales of £300m for its 900-strong own-label range by the end of the financial year in April.

The wholesalers have further expansion plans this year. Spar is planning a relaunch of its entire range and will next month relaunch its value range as Spar Extra Value with 20 new products. This will be followed in May and June by a revamp of about 200 products. Some products will be delisted to make way for about 100 new ones, while 100 products will be redeveloped with new packaging and new recipes.

Landmark will also put more emphasis on its Lifestyle Value range. "With consumers' disposable income being stretched, the value range is vital," says retail controller Raj Krishan. "We plan to expand the value range to cover more categories and SKUs." Meanwhile, Nisa-Today's says it plans to develop its food-to-go range in fresh and chilled, as well as new lines in ambient grocery, while Bestway will add a further 30 products.

The downside for c-stores is that they can't compete with the multiples on buying power or price - hence the recent calls for independents to collaborate on a common own-label range (see boxout). The upside as far as the independents is concerned is the decent profit margins to be had. Landmark claims its Prince Consort spirits range offers margins of up to 26.1% profit on return and Nisa-Today's has developed a range of permanent 'twofer' offers across key own-label categories such as paper, biscuits and chilled in the past year that it claims has generated strong sales.

Though some independents have gone a long way down the own-label road (Harry Tuffins boasts a 40% offer - see boxout), most have no intention of increasing it to that level. Mills Group's 7% own label/branded split is more reflective of where the majority are at the moment and suggests 10% is a more likely end goal.

In the long term, branded is likely to remain the focus. But with own label still under-represented in the independents, there's a lot of room for growth. There's also a strong imperative. Independents have to adapt their offer to recession-hit shoppers if they are to fend off competition from the discounters and multiples. Failure to do so would be nothing less than an own-goal.