Own brands: a “hooker” on prices and a breath of fresh air for the Mexican consumer

In Mexico, as in the rest of the world, it is clear that the last few months have placed the consumer “against the current”. Stated more precisely, the inflationary environment current situation, coupled with an increase in the levels of unemployment in our country, it has had a notable impact on the purchasing power of the population. Faced with this new reality, Mexican consumers have reacted within the framework of the same three changes that Kantar identified in the purchasing habits of Latino consumers. The first is obvious decrease in purchase frequency, that is, the consumer visits physical or digital establishments less. Secondly, who consumes is in constant search of get more value for your money. This leads to visiting new stores, channels and formats, putting traditional retail brand loyalty at risk. Third, the growing trend towards health care and conscious consumption that the consumer favors quality over quantity. In short, the consumer is now more sensitive to price. For this reason, you are particularly willing to explore new options until you find the value equation that works best for you.

At the sector level, the fall in the number of purchases is forcing large retailers to seek new formulas to make the most of each visit to the stores. In this context, changes in the buying habits mentioned above favor own brands. Also known as private labels, these are product options that have gained penetration and acceptance in the market, at the same time as they have undergone a significant evolution in terms of image and positioning. It is no longer those bland, substandard products that the consumer had as a last option in decades past: they are now brands in the full breadth of the definition, which, in addition to a competetive price, offer differentiation, quality and innovation. These products tend to be less expensive, in part because there are savings in sales and distribution costs when developing them, making them very profitable for the retailers who carry them. In addition, full control over own brands allows retailers to systematically monitor prices and costs on a daily basis and from a global and local perspective. By having key information on their own brand portfolio, but also on national brands, retailers can strategic adjustments to your prices and provide that added value that today’s consumer is looking for.

In general, own brands are present in almost all categories. For example, Walmart has developed a diversified portfolio of own brands in different categories and under several positions. The World Table brand, considered premium, includes imported products that offer flavors and dining experiences from other countries. At the general level, there’s Great Value, which includes staple foods for everyday use; in fact, it is the best-selling own brand in the world. Walmart’s commitment to its own brands has also extended to categories not always explored by these shopping options: for personal care categories, the Equate brand is also present in all countries where Walmart operates , and in the value segment, Walmart offers the Aurrerá brand in Mexico, closer to the Bodega Aurrerá stores, of the same group, but also present in all Walmart stores in the country.

According to Euromonitor, the Mexican consumer is very willing to buy own-brand products, which is reflected in the notable increase in sales. Its role extends to the different levels of consumption, because all have been in one way or another put “against the tide”: the wealthiest consumers value the quality of said brands, and those on tighter budgets appreciate their low prices. Retailers are leveraging their own brands to keep their share of consumer spending power down, and competing and competing side-by-side with national brands.

Finally, it is important to point out that in our country the concentration of sales in a few retailers favors the growth of own brands and can affect relationships between commercial chains and their suppliers. In response, national brands will surely intensify advertising and direct communication with consumers to highlight their value proposition, supported by a more aggressive pricing and promotion strategy. There fierce competition this will favor the market, but above all it will lighten the pockets of consumers a little.