Home care continues its negative showing due to maturity and pressure from private label
Sales of home care registered retail value declines across many categories in 2013, in part due to the maturity of a number of categories, such as laundry care, and the pressure from private label on value sales. While private final consumption grew at a fairly healthy level in 2013, consumers continued to display a strong preference for value-for-money home care. A further obstacle to growth was the strength of the Swiss Franc, which continued to provide a strong incentive for cross-border sales.
Home care continued to be heavily impacted by declining unit prices across virtually all categories as competition from private label and between branded manufacturers remained fierce. The strength of retail giant Migros’ private label continued to be detrimental to unit prices, given the fact that the retailer offers a large and popular range of value-for-money home care. Another source of pressure was the higher inflow of cheaper imports from the EU/EEA following the opening of the Swiss market in July 2012. In the face of growing competition from private label and cheaper imports, branded manufacturers responded with more frequent price promotions, thereby adding further downward pressure on unit prices.
Private label and large multinationals compete vigorously
Although there is a fairly large number of players present in Swiss home care, the majority of sales remained in the hands of private label and a small number of leading global players. The most significant player remained Swiss retail chain, Migros, with its private label range of home care accounting for the largest value share in 2013, and resulting in overall private label being ahead of branded products. After private label, the three leading global players, Unilever, Procter & Gamble and Henkel, took the leading positions, relying on their well-known global brands.
Discounters continues to gain but supermarkets remains the strongest channel
In line with the growing demand for private label home care, discounters registered the fastest growth in value sales in 2013. This was particularly detrimental to the value share of health and beauty specialist retailers and traditional grocery retailers, but also supermarkets and hypermarkets felt the pinch. The growing strength of discounters was further underpinned by the fierce outlet expansion pursued by German discounter chains, Lidl and Aldi, which in turn also put pressure on domestic discounter chain, Denner. However, in absolute terms, supermarkets remained the most important channel in home care in 2013, supported by the strong performance of the private label ranges of leading supermarket chain, Migros.
Lack of demand for premium products expected to hamper future sales of home care
Sales of home care are expected to register a stagnant performance in constant value terms at 2013 prices over the forecast period. While demand will remain positive across most categories, consumers are expected to grow increasingly reluctant to spend on premium products, especially in view of the growing availability of higher-quality private label alternatives. The uncertain outlook for Switzerland’s economic performance is further expected to impact consumers’ spending decisions to the detriment of home care. In addition, growing price competition between manufacturers, retailers and private label, especially following the recent opening of the Swiss market to cheaper imports from the EU and EEA, will result in unit price declines across virtually all categories, thus adding further pressure on value sales.