By David Ingham
Retailer’s new private label carries prices up to 50% lower than major brand name counterparts.
Spinneys Dubai has driven down prices dramatically with the introduction of its Home Choice private label. Products within the range are priced up to 50% lower than brand name counterparts, and Spinneys plans to significantly increase the range of categories covered by Home Choice.
“If you look at world retail trends, it is not very hard to see the impact being made by private label brands in the food retailing giants,” Warwick Smith, marketing manager for Spinneys Dubai, told RNME. “Home Choice is a quality product that customers can have faith in, while resting assured that they are being offered competitive prices.”
Spinneys is naturally at pains to insist that Home Choice is not just about driving down prices, saying that it is trying to offer both, “quality and affordability.” However, a look around a Spinneys store in Bur Dubai shows that the retailer is significantly undercutting brand name suppliers. For example, a 1.5 litre unit of Home Choice bottled water costs just AED0.75 (US $0.20), compared with AED1.25 for the cheapest equivalent brand name product.
Home Choice instant coffee is priced at a similarly competitive level. A 200 gramme jar of its ‘Premium Blend’ retails for AED14.75, compared with AED24.25 for a 200 gramme jar of Nescafe. A cheaper Home Choice ‘Classic Blend’ sells for just AED 9.50 for the same size unit.
Smith says that Spinneys can offer such competitive prices because it is buying in large volumes and because suppliers have been, “carefully selected” to supply what it needs at the right quality and price. “We use a small number of suppliers and ensure the most cost effective distribution process,” Smith explains. “This increases our purchasing power parity, resulting in reduced costs to Spinneys which we then pass on to our valued consumers. We cut out the middlemen who can peg market prices.”
Home labels are well established in Europe and North America; in the UK, for example, they now account for a 39% value share of grocery sales. Their success has come, however, at the expense of the big brands and Smith confirms that some of Spinneys’ suppliers have expressed concern about the introduction of Home Choice.
“Naturally, some suppliers have reacted negatively to its introduction. Suppliers don’t tend to like too much competition,” he admits. “I think it is good for the market, as it increases competition, which can drive either prices down or quality up, which benefits the consumer in the end.”
Some suppliers, however, seem to welcome the development. Home Choice bottled water, for example, is produced by Gulfa, a UAE producer whose own product is sold in Spinneys at a price of AED1.25 for a 1.5 litre unit, compared with AED0.75 for the Home Choice equivalent.
At the moment, it is still very much early days for Home Choice. The range of categories covered by the label is currently small, around half a dozen, and customer feedback is still being gauged. However, there is no doubt that Spinneys has big ambitions for the brand.
“I would like to see the Home Choice label move into all categories of products that we sell,” says Smith. “This does not by any way mean we are trying to become a discount store. Home Choice is merely another weapon to ensure we remain the premium food retailer in the GCC.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.