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. Following the introduction of the trade ban on Sundays (which already applies on three Sundays of the month in 2019 and will apply to all from 2020), another example is the retail tax, which may return in 2020 following a favourable decision of the General Court of the European Union in favour of the government.
However, among all the legal changes planned by the current government, the biggest impact on the market of private label products would undoubtedly be the possible introduction of restrictions on sales of large-area store chains. At present, the shape of this limitation is not yet known, and the statements are very vague. However, the most probable scenario, if any, is the introduction of restrictions on the share of private labels in the range of products offered by retail chains.
Negative impact of private labels reduction
According to PMR’s estimates, the value of the private label market in 2018 reached almost PLN 50bn. The potential reduction will have an impact on the value of the market. What is more, discount stores will be the most affected channel, where the share of private label sales is often above 60%. Currently, this channel is the largest segment of the market. Moreover, assuming the most pessimistic scenario for a market where the share of private label sales is no higher than 20% of retailes’ revenues, PMR estimated the market value scenario. If this limitation had been in force from the beginning of 2019, the market value would have been over PLN 22bn lower than the current forecast, i.e. the estimated value of sales of private labels of the market leader, Biedronka.