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Sat 9 Apr 2011 10:53 AM

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GCC grocery retailers must grow own brand items

New report says retailers are missing out on 'significant opportunity' to improve sales, market share

GCC grocery retailers must grow own brand items
Grocery retailers in the GCC region need to develop their own brands in a bid to boost sales and market share, a new report has said, (Getty Images)

Grocery retailers in the GCC region need to develop their own brands in a bid to boost sales and market share, a new report by Booz & Company has said.

Globally, retailers' own brands are growing at a faster rate than traditional consumer goods brands but in GCC is still lagging so far behind the US and Europe, the study said.

Booz & Co said that, as a result, GCC grocery retailers were missing out on a "significant opportunity".

The GCC grocery market is growing at 11 percent per year, it added, from $43 billion in 2005 to $72 billion in 2010.

Gabriel Chahine, partner, Booz & Company, said regional retailers were making moves to gain scale, gradually shifting the balance of power away from multinationals.

"These efforts to gain scale position retailers for strong plays in private label, just as the need for them to make such plays becomes more urgent...however, private label is not yet a critical focus for regional retailers," he added.

Karl Nader, senior associate, Booz & Company, said: "In the GCC, private label accounted for just three percent of 2009 total grocery sales. Although retailers recognise private label's potential, they have not effectively tapped into its benefits. The opportunity for GCC retailers in private label is clear."

Booz & Company said a strong private label brand offers retailers increased profitability, optimised assortment mix, strong brand image and customer loyalty.

"Based on the current maturity of the GCC retail market, retailers could achieve private label share of 15 to 25 percent of grocery sales, which would represent a market size of $5 billion to $9 billion, and could translate into a net margin increment of 1 to 2 percent," added Nader.

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