Restraints expected on growth of private label market

Wpis dostępny jest także w języku: polski

Among all the legal changes planned by the government, the biggest impact on the market of private label products would be the introduction of a possible act limiting the share of private labels in the offer of large-area store chains. Announced in March 2019 by Prime Minister Mateusz Morawiecki.

Recent years have been characterized by a growing influence of state policy on the retail market.  The ban on Sunday trading, whose third and final phase came into effect in 2020, is the starkest example. Another is the retail tax, currently still suspended but likely to become reality following a favourable decision of the General Court of the European Union in 2019.

However, the Polish government has also signalled plans to adopt regulations specifically dealing with private label sales, which it wants to restrict.  Although the exact nature of these restrictions remains unclear – government officials have been very vague about details – the most probable scenario is the introduction of a cap on the share of private labels in the offer of retail chains.

Such a law would affect the value of the private label market in a very significant way, of course. The hardest-hit channel would be discount stores, where the share of private label sales is often above 60%, and which represent the biggest part of the private label market in Poland.

Negative impact of private labels reduction

PMR has calculated the impact on market value of the most pessimistic scenario: a 20% cap on the share of private labels in retail chains’ revenue. We estimate that, had such a law been operative in 2019, it would have wiped more than PLN 22bn (€5.2bn) off the value of the private label market, i.e. roughly the amount of revenue that the market leader, Biedronka, generated from private label sales that year.

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