Customer Loyalty &

Private Label Products

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

KPMG Global Consumer Markets

 Foreword
Retailers are facing increasing pressure from all fronts. The competition KPMG is one of the world’s
is getting tougher, customers are more discerning and demanding, and leading professional service
the traditional barriers between products and services are disappearing. organisations, with over
On top of this, the phenomenal growth of e-commerce is increasing 103,000 staff in 159 countries.
customers’ expectations for more competitive prices and 24-hour service. We have a deep industry
To keep ahead, retailers need an increasing range and depth of expertise orientation, focused on
in customer management. KPMG’s Global Consumer Markets group, in anticipating and meeting our
clients’ needs. KPMG brings
partnership with the Oxford Institute of Retail Management (OXIRM) has
lasting and measurable
undertaken research across Europe into retail trends and the impact of
benefits to our clients through
customer loyalty. the delivery of integrated
solutions that combine
There have been many recent developments in loyalty schemes, with business strategy, industry-
varying degrees of success. The loyalty of customers, who can switch focused people, the latest
freely between retailers, has been influenced by several factors including: processes and technology.

■ advances in technology – magnetic/chip cards, card scanners, falling

OXIRM links sound academic
data processing costs – enabling millions of daily purchases to be scholarship to the practical
analysed, tracked and rewarded; needs of retail and related
service companies. OXIRM is a
■ decline in store numbers and the accompanying increase in store size;
leading centre for retail
■ moves out of town by stores, leading to a decline in shopping management education, with
frequency; an active programme of high
quality applied research, based
■ increase in store size via out of town developments permitting an at Templeton College, the
increase in the range of categories stocked; graduate College of business at
the University of Oxford.
■ increased usage of private label, as both a store loyalty builder and a
ready alternative to branded products, reducing the customer’s
resistance to switch brands;

■ inclusion of pharmacies, post offices, dry cleaners and petrol stations

creating the facility for “one stop” shopping and providing traffic store
generators.

This report confirms that customer loyalty is complex and covers many
retail strategies and operations. We believe that the findings, published
here, will provide valuable insight to retailers, who are looking to
introduce, or already have, private label products.

Contents page

1 Executive summary 1
2 Private Label, retail branding and loyalty 3
3 What are the commercial implications of Private Label? 8
4 What is the right Private Label strategy? 15
5 How does Private Label strategy affect retail brand loyalty? 23
6 How should Private Label strategy be implemented? 25
7 Methodology 27
8 Acknowledgments 30

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.
 1
Executive summary

Customer loyalty cannot be built in a day. Increasingly it is built through longer

term customer relationships with a valued brand. Private label products1, we
find, play an important role in developing a retail brand. As part of KPMG’s
series of research reports on customer loyalty, this report focuses on the role
of private label.

Successful private label development is the result of harmonised strategies

and effective implementation, which are specific to each individual retailer and
product category. We believe there are several routes to success.

High performing retailers align their private label strategy with their overall
marketing strategy. By identifying the strategic focus – and then delivering
relevant product and service benefits to the customer – true loyalty to the
retail brand can be established.

Private Label Strategic Alignment Matrix

Marketing
Strategy

Competitive Positioning
Price Differentiation
Proportion of Private Label Products

Narrow
High

Consumer Choice
lty
ya
Lo
d

Wide
Low

an
Br
il
ta
Re

KPMG Global Consumer Markets

No control Product design Total control

Control of the Supply Chain of all aspects
of production
Private
Label
Strategy

1
Private label is any product with
a retailer-owned name on it.

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

1
 Executive summary (continued)

The Private Label Strategic Alignment Matrix is an effective tool to help

retailers measure and evaluate the consistency of their private label and
marketing strategies. How it is developed and used to build brand loyalty is
explained in greater depth in the main section of this report.

To implement a successful private label strategy, we believe retailers need to:

■ ensure any private label strategy is aligned with overall marketing strategy by
seeking a focused positioning in the Private Label Strategic Alignment Matrix;

■ ensure high standards of quality control (pre-transaction) and customer

service (post-transaction) are maintained. Trust is fundamental for
shoppers to accept private label products and services. Accepting private
label also establishes additional trust in the retailer’s ability to meet
consumer needs reliably; and

■ ensure relevant products and services are developed under private label.
Certain products are less suited to private label development. It is easier for
the retailer to encourage the consumer to try frequently purchased, low
value private label products relevant to the retailer’s core range, rather than
infrequently purchased, high value products outside the retailer’s core range.

Electronic retailing has special relevance for private label. There is more
opportunity to switch between e-tailers on the Internet than between
conventional ‘bricks and mortar’ retailers. Established private label can allow
web-based retailers to offer unique products, so helping to trade on factors
other than price, deter shopper promiscuity and secure lasting and profitable
customer loyalty.

This report includes case studies based on research and collaborative reviews
of seven major European retailers with substantial private label products: Aldi,
Asda (George clothing), Boots the Chemist, Decathlon, Marks & Spencer,
Migros and Tesco.
KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

2
 2
2
Private Label, retail branding
and loyalty

A brand differentiates products and services, and strong brands stand out
from the competition. They are less prone to substitution and generate high
levels of loyalty.

Private label products contribute to retail brand differentiation, and their

positioning reflects the value of the brand. They are not perceived as being
interchangeable with similar private label products in other retailers (unlike
manufacturer branded products, which are the same regardless of the
retailer). 100% manufacturer branded products means that retail
differentiation can only be achieved by service related factors, such as
location and atmosphere.

A retailer can achieve differentiation through a large (but not necessarily

exclusive) portfolio of private label products. As consumers usually visit
with the intention of buying, and not simply for the experience, this is
important. Service adds to the differentiation, and together with a unique
product range, results in a strong retail brand. The extent to which this
differentiation is seen as relevant by consumers can be measured in terms
of: economics (price premiums and market share), attitude (consumer
perceptions) and behaviour (consumer loyalty).

Customer loyalty is therefore the result of an affinity with a valued brand.

As retail brands can be tangibly enhanced by the development of private
label products1, many retailers use private label as an important tool.

This report provides a strategic framework with which to analyse a retailer’s

private label development and identifies the critical issues in implementation.
The methodology for this report is briefly discussed in Section 7.

An Overview of Private Label

There are many definitions for the term private label, including own brand,
store brand, retailer brand, own label, among others. The term used in this
study is private label, and is defined broadly as:

“any product with a retailer-owned name on it”

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(Davies2, 1990)

A private label product can be anything from a basic commodity product, such
as tinned tomatoes, to an innovative retailer brand with relatively high quality
and price. The term is used as a general name for all retailer-owned product
names, regardless of their level of sophistication. Private label is initiated by
the retailer and the onus for the development, manufacturing, marketing and
2
Davies, Gary (1990): The two
ways in which retailers can be distribution of private label products is on him, though often in close co-
brands. Working paper. C2,
operation with suppliers. As this may require considerable resources, smaller
Oxford Institute of Retail
Management.

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

3
 Private Label, retail branding and loyalty (continued)

or independent retailers may join together to source products. Products

supplied in this way tend to be commodity products, such as fresh fruit, or
simple, low-cost products.

Private label products can be classified as follows:

Store brands carry the retailer’s name, but no additional sub-brand. For
example, Tesco’s standard store brands.

Store sub-brands carry both the retailer’s name and a sub-brand. For
example, Tesco’s Finest range.

Generic brands have a name independent from the store name. For example,
Euroshopper’s range of products. These are not named store brands; they can
be used across differently named stores and chains.

Individual product brands are owned by the retailer and are treated by the
company like individual brands. For example, Aldi uses individual product
brands. The retailer’s name may be visible in the background but is not
emphasised.

Exclusive products are not, by definition, private label products, but possess
some similar characteristics. For example, Migros in Switzerland has a number
of exclusive agreements with suppliers (for example, with Del Monte).

Many retailers employ more than one type of private label. A grocery
retailer may have store brands for the majority of private label lines, and
store sub-brands for the more upmarket ranges and aspirational products or
for the more low-price commodity ranges like Asda’s Farm Stores or
Migros’ M-Budget.

Private label penetration3 varies significantly across European grocery markets,

as shown opposite.
KPMG Global Consumer Markets

3
The data describing private
label penetration across different
countries is often inconsistent
(see Appendix A for details).

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

4
 Private Label Share of Sales by Country, in 13 Food and 7 Drink Categories4

50.7%
59.6%
Switzerland
36.7%
45.9%

34%
42%
UK
25.3%
34.2%

23.9%
34.5%
Belgium
25%
35.3%

20.9%
25.3%
Netherlands
11.5%
16.6%

17.6%
24.1%
Spain
10.5%
15.7%

16.5%
20%
France
11.8%
15.4%

12.2%
18.5%
Germany
5.8%
8.2%

8%
9.7%
Finland
2%
2.1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Food value

Food volume

Drink value

Drink volume
KPMG Global Consumer Markets

4
Source: ACNielsen (1998):
International Private Label
Retailing – Indicators and
Trends. Note: The figures are
simple averages. The German
figure excludes Aldi, which
almost exclusively stocks
private label product. With Aldi
included, the German
penetration can be estimated
to rise more than 10
percentage points.

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

5
 Private Label, retail branding and loyalty (continued)

The Major UK Food Retailers’ Private Label Share of Sales5

54.3%
Asda 57.4%
57.9%

53.5%
Safeway 53.1%
53.2%

65%
Sainsbury’s 63.1%
60.7%

49.8%
Somerfield 49.6%
50.6%

55.8%
Tesco 55.7%
55.2%

55.3%
All Stores 55.3%
55.3%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

1996

1997

1998

The most penetrated markets in food retailing are the UK and Switzerland, in
others such as Italy and Norway the penetration is still very low. In many
cases, the actions of one or two retailers within a country have a significant
impact on country averages. For example, in Switzerland and Germany, Migros
and Aldi respectively have very high private label penetration and a significant
market share, which greatly impacts national private label market share.
There are markets where nearly all the key players have developed their
private label similarly, such as UK food retailing, as shown above.
In the UK grocery sector, one of the major reasons for a high level of private
label penetration is the fresh and chilled product categories, as it is difficult for
branded manufacturers to handle these very short shelf life products. For
example, private label penetration in the chilled ready meals category is
around 95% in the UK (Mintel: Own Label Food, November, 1998).
KPMG Global Consumer Markets

Private label exists in most product categories in non-food retailing, such as

clothing, electrical products and DIY. Relevant statistics for general private
label penetration are unavailable, because of the fragmented nature of non-
food retailing. The exception is the large grocery retailers that operate both in
food and non-food retailing. The main non-food areas are toiletries and
5
Source: ACNielsen, State of
the Nation 1998. Note that household products (see opposite).
accounting for Somerfield’s
acquisition of Kwik Save would In the grocery non-food sector, the private label offer may appear similar, but at
reduce their 1998 figure to a cheaper price. For example, Sainsbury’s Wash and Shine or Tesco’s Two in
around 39%. Kwik Save’s
figures for 1996-98 are 20%,
One compared to Proctor & Gamble’s Wash and Go shampoo. Retailers are also
21% and 26% respectively. entering new non-grocery related categories, such as CD-players and books.
© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

6
 Private Label Shares by Country, Personal Care and Household6

30.2%
44%
Switzerland
49.6%
58%

16.8%
28.5%
Belgium
37.4%
48.6%

15.2%
22.2%
UK
44.4%
47.4%

9.5%
16.7%
Netherlands
29.4%
34.8%

8.4%
12.1%
France
30.7%
33.3%

8.7%
15.3%
Spain
28%
32.6%

7%
12.3%
Germany
20.3%
30.4%

5.1%
7.5%
Finland
11.6%
15.1%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Personal care value Household value

Personal care volume Household volume

In the non-grocery sector, many retailers are specialised and serve a narrower
KPMG Global Consumer Markets

niche in the market. Sometimes the niche can be very narrow, such as Tie
Rack. Most DIY, cosmetics, sports goods retailers and department stores sell
a mixture of both private label and manufacturer brands.
Where private label does exist in non-grocery retailers, 100% private label is
more common and the border between the manufacturer and the retailer is
not as well defined. Some manufacturers have vertically integrated down the
supply chain and opened retail units in order to distribute their private label
6
Source: ACNielsen (1998):
products, such as Benetton. Some retailers have increased their control up
International Private Label the supply chain, for example Marks & Spencer.
Retailing – Indicators and
Trends.

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7
 3
What are the commercial
implications of Private Label?

Retailers have different commercial objectives for their private label

products and use different types of ranges for different purposes. In an
Institute of Grocery Distribution survey7, UK food retailers were asked what
the role of own brands in a particular category should be. The most
important roles were:

1 improve profitability;

2 build and maintain consumer loyalty;

3 reinforce market position;

4 increase consumer choice;

5 match products more precisely to retailers’ customers.

Others included: the enhancement of store image, better control of supply

chain and product quality and differentiation from competitors. Private label
can also play an important role in building the wider retailer brand.
KPMG Global Consumer Markets

7
Institute of Grocery
Distribution / Mary McGrath
(1995): The Changing Face of
Retailer Brands. IGD Business
Publications, Watford.

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8
 Price Index, Private Label vs Manufacturer Brands (=100)8

83.4%
58.4%
France 69%
72.1%
70.7%

86.9%
60%
UK 64.1%
68.6%
69.9%

69.3%
51.2%
Switzerland 64%
67.9%
63.1%

55.8%
43%
Germany 69.2%
58.2%
56.6%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Household

Personal care

Drink

Food

Total

Improve Profitability

According to ACNielsen, private label prices are generally at least 20% to

40% cheaper than manufacturers’ brand prices, as shown above.

Private label products are not necessarily of comparable quality with the
manufacturer branded products. Lower quality “budget” product lines and
higher quality private label products may be included.

Consumer buying prices are still generally lower for private label products
KPMG Global Consumer Markets

even when “budget” product lines are excluded, as shown in the next table,
where private label products are, on average, 14% cheaper than the
manufacturer branded product lines.

8
ACNielsen (1998): International
Private Label Retailing –
Indicators and Trends. NTC
Publications LTD, Henley-on-
Thames.

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

9
 What are the commercial implications of Private Label? (continued)

Prices of Manufacturer Brands compared to Private Label (PL) Tesco and Sainsbury’s in the UK9

Product Brand price (£) PL price (£) Price Index (£)

Brand Tesco Tesco Tesco
Sainsbury’s Sainsbury’s Sainsbury’s
Baked beans (420g) 0.31 0.23 74%
Heinz 0.25 0.23 92%
Washing powder (E3) 2.39 1.99 83%
Persil 2.39 1.75 73%
Dog food (400g) 0.45 0.41 91%
Pedigree chum 0.45 0.42 93%
Cornflakes (500g) 0.99 0.79 80%
Kellogg’s 0.99 0.89 90%
Instant coffee (200g) 3.25 2.65 82%
Nescafe Original 3.25 2.79 86%
Soft drink (2l) 1.29 0.69 53%
Coca-Cola 1.29 0.95 74%
Tea bags (160) 2.99 1.69 57%
Tetley 2.99 2.19 73%
Diapers 5.65 4.99 88%
Pampers 5.65 4.99 88%
Canned tomato soup (300g) 0.37 0.37 (290g) 103%
Heinz 0.41 0.37 (295g) 92%
Tomato ketchup (1.14kg) 1.46 1.43 98%
Heinz 1.46 1.29 (1kg) 101%
Cat food (400g) 0.47 0.43 91%
Whiskas 0.47 0.43 91%
Toilet tissue (x2) 1.07 0.95 89%
Andrex 1.79 (x4) 1.69 (x4) 94%
Sanitary towels (x14) 1.59 1.25 79%
Always 1.59 1.69 106%
Fish fingers (x10, 300g) 1.49 2.15 (x20, 600g) 72%
Birds Eye 1.49 1.25 84%
Frozen peas (2lb) 1.29 1.29 100%
Birds Eye 1.29 1.19 92%
Squash (1l) 0.79 0.65 82%
Robinson’s 0.79 0.75 95%

Mean average
Adjusted 1.64 1.33 86%
KPMG Global Consumer Markets

9
Tesco and Sainsbury’s stores Prices compared in this table are of products that may appear to be similar,
in Oxfordshire (23.11.1999).
The products in the table are though in reality they may differ, not only between the manufacturer branded
well-known brands, all appear product and the retailer branded product, but also between the different
in ACNielsen’s list of Top 100
UK Grocery Brands and are retailers’ products.
known value items as stated in
Checkout, December 1998:
The Top 100 Grocery Brands. Prices of both manufacturer brands and private label are similar in the two
Price index figures have been stores. An example of the excluded “budget” product lines (which may have
adjusted (where relevant) to
take account of differences in been included in the ACNielsen survey) is a can of baked beans, which could
weight.

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

10
 have been purchased for £0.10 (10p) from the Sainsbury’s Economy or Tesco
Value ranges. It is also worth noting that these prices may vary considerably
over time. A similar OXIRM survey in January 1999 showed a 22% difference
in price between private label and manufacturer branded goods.

Despite the fact that private label products are usually priced lower than
manufacturer brands, they generally carry larger profit margins, though
gross profits may be similar. Key Note estimates that in grocery, margins
are generally 5% higher10. Corporate Intelligence on Retailing (now Retail
Intelligence) explain that “although in percentage terms own-label is more
profitable than branded goods, in cash terms the gross profit is the same
on average”11. Laaksonen states that “the margins of own brands can be 5-
20 % better than the margins derived from the leading brands”12. Profit
margins may therefore vary significantly across different retailers and
product categories.

Private label products may be cheaper to produce for a number of reasons,

including:

■ where private label uses the manufacturer brands as the benchmark it

might be seen as capitalising upon some of the original product
development and marketing;

■ manufacturers may produce private label at prices that reflect only the
direct manufacturing costs – in order to fill excess production capacity;

■ if the manufacturer’s sales force and distribution channels are not used, the
retailer’s buying price can be reduced;

■ if the retailer has enough (marginal) buying power, it might be able to

negotiate a reduction in the manufacturer’s profit margin.

The following example illustrates how a retailer’s buying price for private label
product might be up to 25% lower than the perceived comparable
manufacturer branded product.

An Example of the Costs Avoided with Private Label13

Manufacturer Brands Private Label
Raw materials 35 35
Packaging material 12 12
Manufacturing costs
- variable 9 9
- fixed 5 -
10
Key Note Market Report Research & development 3 -
(1997): Own brands. Key Note,
Sales force 4 -
KPMG Global Consumer Markets

Middlesex. Seventh Edition.

11
Corporate Intelligence on Advertising & promotion 9 5
Retailing (1998): Own-label in
the UK - The Grocery Trade Transport & distribution 5 2
Poised for Change. Corporate
Other costs 10 10
Intelligence on Retailing,
London. Operating profit 8 2
Laaksonen, Harri (1994): Own
12

Brands in Food Retailing

Retail Buying Price 100 75
Across Europe. Oxford Institute
of Retail Management.
Source: OXIRM on the basis
13

of manufacturer annual reports

and company accounts.

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11
 What are the commercial implications of Private Label? (continued)

This example shows how costs can be reduced for private label, although
the cost structure will vary between different manufacturers and products.

Private label products may also help retailers increase margins indirectly, by
reducing the reliance on a particular manufacturer, enabling tougher
negotiations on price.

Providing a low price private label product may reduce pricing pressures on
manufacturer branded products, and by stocking differentiated products, in
terms of size and specification, direct price competition can be avoided.
This means more risk for the retailer, especially in terms of product
development. By stocking only private label product, this risk becomes
fundamental to business success, as poor product development may
seriously impact consumer loyalty.

Consumers will then turn to the competition’s products, rather than other
products within the same retailers.

Profitability results from a combination of factors – the actions of retailers,

consumers and manufacturers (as well as accounting principles). This
makes direct comparisons between retailers, product categories and/or
countries difficult. However, what is clear is that private label may be a
means to improve profitability, both directly and indirectly.

Build and Maintain Consumer Loyalty

The ability of private label to build and maintain consumer loyalty has been
discussed extensively (for example, see Corstjens14). To obtain loyalty, it is
necessary to have a unique offer. A distinctive private label range that
matches the needs of the retailer’s customers can provide this.

In the UK, ACNielsen studied15 shopping habits in different grocery stores.

The importance of “good quality own label” varies from 3% in Somerfield
to 7% in Sainsbury’s; the average being 5%. Private label also influences
other attitudes, such as “good range of products”, “low prices” and “value
for money”. Private label appears most important to “new families”, young
couples with small children.

An ACNielsen Homescan survey in the UK, highlights the reluctance of

private label buyers to change store:
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Corstjens, Judith and

14

Corstjens, Marcel (1995): Store

Wars. The Battle for
Mindspace and Shelfspace.
John Wiley & Sons Ltd,
Chichester.

ACNielsen: State of the

15

Nation 1997.
© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

12
 Attitudes of the Own Label Buyer16

Percentage agreeing with statement Branded Buyers Own Label Buyers

(<20% private label spend) (>80% private label spend)
“The economy will get much better in the next 12 months” 11.0% 24.0%
“I like to shop at different stores to get the best prices” 42.7% 28.8%
“I know which store offers the lowest price on my usual brands” 46.3% 20.2%
“When my favourite product is on promotion I stock up on it” 36.6% 56.7%
“I shop around a lot of different stores for special offers” 20.7% 11.5%
“I find out about new products from TV adverts” 53.7% 32.7%
“I have bought a new product after seeing it on TV” 41.5% 23.7%

The table suggests that private label buyers are more store loyal and not as
easily influenced as brand buyers. They are not as price-oriented as has been
thought, as they don’t tend to switch stores to obtain the lowest prices.

Reinforce the Retail Brand

A brand is unique, consistent in quality and offers something of value to the

consumer. The advantages of a retailer brand has been described as twofold17:

1 Differentiation, helping the retailer to move away from price competition.

2 Consumer loyalty, by establishing a reputation for reliable quality (see

previous section).

A retailer can achieve brand differentiation either from the uniqueness of the
products through retailer-made or controlled product specifications, or from
the uniqueness of the total offer. For example, Aldi differentiate on the
grounds of cost leadership so the price of Aldi’s exclusive products is more
important than any other innovative, distinctive element.

The brand franchise may be extended to other products or services. The

relationship between private label and the retailer brand is mutually
supportive: as private label helps to build the retail brand and the brand
supports private label sales.

In fact, private label can play a crucial part in building the retail brand.

Increase Consumer Choice

Consumer choice is increased through private label. Some categories, such as

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chilled ready meals, are so dominated by private label – because of the very
short shelf life – that private label is a must if the retailer wants to offer a
competitive range.
Source: J. Sargent (1997):
16

Own label: taking stock in

1997. Original source: Many retailers offer a range of price and quality alternatives within a category
ACNielsen Homescan Survey.
by creating differently positioned private label products. For example, Tesco
Gary Davies (1990): The two
17
has its budget Value range, Healthy Eating, normal Tesco-brand and
ways in which retailers can be
brands. Working paper, C2,
“restaurant-quality” Finest-range to cover many different price-quality options.
Oxford Institute of Retail
Management.
© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

13
 What are the commercial implications of Private Label? (continued)

Private label products also increase choice by providing alternatives to

manufacturer brands. Retailers can use the increasing amount of information
they have on customers and their shopping habits, through scanning and
loyalty cards, to develop new, customer-driven products. This customer
knowledge can give retailers a competitive edge (see next section).

However, if the private label product is very similar to an existing one, it can
be argued that private label may decrease consumer choice. And as private
label products generally take market share from secondary and tertiary
brands, rather than from brand leaders, as the following diagram illustrates,
the result can be to drive smaller manufacturer brands out of the market. This
also decreases customer choice.

The ‘Average’ Market Structure (1997 vs 1975) in the UK18

(£%) (£%) % change

16.4
30 +83%

14.7

8.8 -40%
19.4 Own label
15.6 -20%

Other brand (<2% share)

15.3
13.7 -10%
Other brand (>2% share)

34.2 31.8 -7% No. 2 brand

Brand leader

1975 1997

Match Products to Customers’ Needs

During the past few years, the vast amounts of data retailers have been able
to gather on customers has increased significantly, due to sophisticated
scanning and loyalty schemes. Electronic commerce also enables retailers to
store information on customers’ buying habits and preferences, allowing
companies to develop products to match customers needs and offering cross-
selling opportunities.

Armed with relevant information, retailers can use private label to tailor
products and services to their consumers. For example, Boots recognises that
customers buying at airports prefer smaller sizes and different ranges of
products to those buying in out of town stores. They also know that people
KPMG Global Consumer Markets

who buy rolls of film also tend to buy picture frames and related goods, so
they can arrange displays accordingly, or offer special linked purchase deals.

18
Source: Taylor Nelson Sofres

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

14
 4
What is the right
Private Label strategy?

Case studies covering seven major European retailers have been analysed
to construct a strategic framework for private label development (see
Section 7 for case study details).

As private label is a key component of the retailers’ overall strategy, it is

sometimes hard to separate private label success and the general success
of the retailer. What is clear is that there are many types of successful
private label strategies.

Competitive Positioning

A strong company culture is a common feature among all the retailers

studied. Founders or senior executives have set out the company’s
business principles, and the retailers have aligned their strategy to these.
The trading strategies and routes to differentiation are varied, but clearly
distinctive. Within most of the case study retailers (with the exception of
Tesco), the basic strategy has remained nearly unchanged from the very
early years. Tesco, as an exception, provides an example of how a retailer
can evolve from being a seller of manufacturer brands only, to a leading
developer of private label products.

For all of the retailers studied, private label has been, and is, an important
means of putting the distinct corporate strategy into action. It is not just a
way to increase margins (important though this is) and it is possible to
carry out too much private label development. For example, it can be
argued that Sainsbury’s have actually reduced their private label
development in recent years. Private label is thus utilised to achieve
competitive advantage – to build the retailer brand. For example, in Migros,
private label has been employed to reflect company values of health, high
quality and ethics.

Private label is therefore an essential element of the overall retail

marketing strategy, which could be simply defined as cost or
differentiation. This price/differentiation forms the framework developed
here for evaluating private label strategy.
KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.
15
 What is the right Private Label strategy? (continued)

Private Label Strategic Alignment:

Stage One – Competitive Positioning Marketing
Strategy

Competitive Positioning
Price Differentiation

Aldi M&S (Food)

Decathlon

M&S Boots

Migros

Asda Tesco

This model will be developed further throughout this section.

KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

16
 Private Label Strategic Alignment:
Stage Two – Consumer Choice Marketing
Strategy

Competitive Positioning
Price Differentiation

Aldi M&S (Food)

Decathlon

Narrow
M&S Boots

Consumer Choice
Migros

Asda Tesco

Wide
Consumer Choice

In the generalist market, consumers still prefer manufacturer brands in many

product categories. According to Mintel19, in a consumer attitudes survey
undertaken by BMRB, 41% of the sample of 964 housewives in the UK
(where leading food retailers claim around 50% of sales on private label)
agreed with the statement: “For some products, only branded foods will do”.
By not stocking all manufacturer brands, retailers risk damaging their image as
a competitive retailer. Manufacturer brands provide authority as well as choice
to consumers. In the case of Decathlon, fashionable brand names, such as
Nike, are important to the retailer’s overall image.

In Asda, the George range is marketed strongly, but the brand name is not
visible on garments when worn. The range aims to be a generic family
clothing brand, and Asda deliberately chooses not to target the most label-
conscious teenagers , so restricting consumer choice.

Retailers must therefore select products for private label development which
suit their target consumers. This then forms the second axis of the model.
KPMG Global Consumer Markets

19
Mintel Marketing Intelligence:
Own Label Food, November
1998. Mintel International
Group Limited, London

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

17
 What is the right Private Label strategy? (continued)

Control of the Supply Chain

The three major stages in the retail supply chain are retailing,
manufacturing and primary production. When a retailer introduces private
label, there are several different options for managing each of these
stages, as illustrated below.

Private Label Supply Chain Options and Examples of Retailers’ Choices

Retail Aspects of control Manufacturing Aspects of control Primary producers

Aldi
Manufacturer
Buy to
Retail 3rd party selects &
Retail store suppliers’ Aldi Aldi Aldi
private label production buys raw
specification
materials

M&S
Use 3rd party 3rd party
Retailer Retailer
competence raw material
Boots develops M&S M&S specifies raw M&S
for maximum producers
specification materials
value (open market)

Retailer
Manufacturers
specifies &
tender cost of
buys raw
production
materials

ots
Bo
3rd party
Factories
raw material
Run own specify &
producers
factories buy raw
(contract to
materials
retailer)
Boots

Factories Retailer
Boots supply owned primary
others producers

A key decision in private label supply is whether the retailer or the supplier
develops the product specification. Retailers may take advantage of
manufacturers’ product development and may only want to buy a finished
product at the lowest possible price. This is often the case with basic, low-
price private label products. This requires very little resource from the retailer,
though it may not give any real point of differentiation other than price. But,
by developing the product specification, a retailer may achieve differentiation
and therefore (non-price based) competitive advantage. This demands much
greater expertise, resources and risk from the retailer. Retailer-designed
product specifications may also provide competitive advantage through the
freedom to select suppliers and more directly control cost and quality.
KPMG Global Consumer Markets

Retailers vary their approach with different products, depending primarily on

their overall marketing strategy for that category. Most retailers take more
than one approach and the examples shown are not exclusive.

In the case of many commodity products (such as some grocery products),

the brand leader often defines product standards. Retailers cannot match
brand leaders in terms of innovation, research and development, and
promotional support. Retailers therefore take a cost-driven approach, reliant
on the supplier’s product design.
© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

18
 Private Label Strategic Alignment:
Stage Three – Control of the Supply Chain Marketing
Strategy

Competitive Positioning
Price Differentiation

Narrow
Consumer Choice
Wide
No control Product design Total control
Control of the Supply Chain of all aspects
of production
Private
Label
Strategy

If a retailer’s image relies on the particular characteristics of a product, then it

must be unique. This can be achieved by retailer-made product specifications.
Control of the supply chain may be varied, either via production control (e.g.
Boots, Migros), by strict supplier selection, partnership and control, (e.g.
Marks & Spencer, Decathlon), or by contracting product design to a
competent third party with secured exclusivity (e.g. Asda with George).

The sourcing of private label is sometimes regarded as a process of shopping

around for spare capacity and lowest prices in the short term. This is the case
for some retailers and buying groups, especially with budget ranges, such as
the AMS Euroshopper range. However, in their relations with suppliers, the
retailers we studied prefer long-term partnerships and close co-operation with
information sharing “for both partners’ benefit”.

In practise, this often means geographical proximity, which contributes to

easier supplier control with shorter response times. When expanding
KPMG Global Consumer Markets

overseas, retailers are generally keen to seek local suppliers in the new
markets. The high interest in product quality, as well as private label’s
contribution to building the retailer brand, increases the preference for long-
term supplier relationships .

Control of the supply chain is therefore an essential element in successful

private label development. The level of control is variable, and should be
relevant to competitive positioning. But it stands to reason that if a retailer
wants to create a unique product and unique service to gain differentiation in
the market, the level of control of product design and manufacturer must be
high. This is illustrated above.
© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.
19
 What is the right Private Label strategy? (continued)

Private Label Strategic Alignment:

Stage Four – Proportion of Private Label Products Marketing
Strategy

Competitive Positioning
Price Differentiation

Proportion of Private Label Products

Narrow
High

Consumer Choice
Wide
Low

No control Product design Total control

Control of the Supply Chain of all aspects
of production
Private
Label
Strategy

Proportion of Private Label Products

A total commitment to private label brings rewards as well as risks. It means

there will be no benchmark in-store for the consumer comparisons. There
would be no need for numerous similar products, simplifying the ranges on
offer, and allowing more efficient space management, thus reducing costs.
This is an important objective of Aldi’s to help achieve competitive advantage.
Product packaging and merchandising can be more co-ordinated, leading to a
clearer brand image, differentiation and greater brand loyalty.

However, saturation of private label penetration, particularly within the UK

food sector, has been evident. For example, Sainsbury’s private label
penetration has reduced recently, apparently to avoid consumer choice
becoming too restricted. Thus, “natural” limits on private label penetration
appear to exist depending on the consumer choice offered within the overall
marketing strategy, as illustrated in this model.
KPMG Global Consumer Markets

Mintel Marketing Intelligence:

19

Own Label Food, November

1998. Mintel International
Group Limited, London

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

20
 Private Label Strategic Alignment:
Consistent Strategies Marketing
Strategy

Competitive Positioning
Price Differentiation

Proportion of Private Label Products

Narrow
High

Consumer Choice
Wide
Low

No control Product design Total control

Control of the Supply Chain of all aspects
of production
Private
Label
Strategy

Evaluating Private Label Strategies

Using this analytical framework, it is possible to evaluate the consistency of a

retailer’s private label strategy. A consistent strategy appears as a small area
on the framework, while an inconsistent strategy covers a large area.

For example, a retailer with an overall marketing strategy based on a highly

differentiated product range (and hence offering limited customer choice) has
a consistent private label strategy if there is a high proportion of private label
product over which he exerts a high level of design and manufacture control.
This would be represented as above.
KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

21
 What is the right Private Label strategy? (continued)

Private Label Strategic Alignment:

Inconsistent Strategies
– due to inappropriate private label strategy Marketing
Strategy

Competitive Positioning
Price Differentiation

Proportion of Private Label Products

Narrow
High

Consumer Choice
Wide
Low

No control Product design Total control

Control of the Supply Chain of all aspects
of production
Private
Label
Strategy

One example of an inconsistent strategy for this retailer would be if the

private label objectives did not align with the overall marketing strategy (see
above). Inconsistency may occur through incorrect private label development
and/or through a change in the overall marketing strategy.
KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

22
 5
How does Private Label strategy
affect retail brand loyalty?

In building loyalty to the retailer brand, many retailers choose to use the
store brand as an umbrella brand. This creates marketing synergy between
the store name and the private label’s product name. The retailer’s name
on the label can increase the trust towards the products and encourage the
consumer to buy. Recently, Asda added the Asda brand name to its Farm
Stores range, to bring more trust to the range, as well as strengthening the
Asda price positioning.

All of the retailers we studied, regardless of their pricing strategy, put

heavy emphasis on the quality of their private label, within the limits of
their general strategy and price positioning. None would just take the
cheapest alternative available, but instead aim for the best combination of
price and quality that fits their company strategy.

With the exception of Marks & Spencer, which still has an almost total
commitment to private label, all the retailers would stock a branded
product if they failed to source a private label product of similar quality. For
example, in confectionery where manufacturer brands are very strong, Aldi
stocks selected lines from several major brands, such as Mars chocolate
bars, because there are no products of similar quality available in the
private label market.

To maximise brand loyalty, it is important for a retailer to manage the

quality of private label products throughout the range. Retailers must
therefore consistently deliver the same quality of private label product. This
is especially true in the case of store brands, where there is a strong
association between private label products and the retailer. If the retailer
has different names for each product, for example Aldi, the ability to
convey values of originality and consistency may be reduced. But the
consequences of poor product development, low sales and subsequent risk
to brand loyalty are also reduced.

As retailers become more highly differentiated and focused, brand loyalty

tends to increase, though the relevant potential market may decrease.
What is important is to maximise brand loyalty within the overall marketing
strategy adopted by the retailer. This can be illustrated in the private label
strategic alignment model as follows.
KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

23
 How does Private Label strategy affect retail brand loyalty? (continued)

Private Label Strategic Alignment:

Private Label & Customer Loyalty Marketing
Strategy

Competitive Positioning
Price Differentiation

Proportion of Private Label Products

Narrow
High

Consumer Choice
lty
ya
Lo
d

Wide
Low

an
Br
il
ta
Re

No control Product design Total control

Control of the Supply Chain of all aspects
of production
Private
Label
Strategy
KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

24
 6
How should Private Label strategy
be implemented?

Private label strategies can only be implemented successfully by gaining the

consumer’s trust in the retailer, and the private label products themselves.
The acceptance of private label creates further trust in the retailer’s ability to
reliably meet consumer needs. Consequently, high standards of quality control
(pre-transaction) and customer service (post-transaction) is vital.

The leading UK retailers, with high levels of private label product, enjoy a
high level of consumer trust and this continues to increase, as the following
table shows.

Company 1994 1997

Boots 78 83
M&S 73 83
Sainsbury’s 59 74
Tesco 52 71
ASDA 46 67
Safeway 45 64

% Trusting Companies to be Honest and Fair in the UK20

Similarly, retailers are well trusted, even compared to many well-established

manufacturer brands, as well as other institutions and professionals, as the
following table shows.

Institution/brand % Trusted
Your GP (Doctor) 85
Kellogg 84
Cadbury 83
Heinz 81
Nescafe 77
Rowntree 74
Your bank 72
Coca-Cola 65
Your church 64
The police 62
KPMG Global Consumer Markets

Your Member of Parliament 28

Top Brands and Institutions in the Trust Stakes: % Trusting the

Following to be Honest and Fair21

20
Source: Henley Centre
Planning for Social Change 1998

Source: Brand Strategy July,

21

24, 1998. Original source:

Henley Centre Planning for
Social Change 1998

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

25
 How should Private Label strategy be implemented? (continued)

The case study retailers have several ways of reinforcing consumer trust
and therefore loyalty towards their private label products. Refund policies
aimed at quality assurance are common. Examples of these are Marks &
Spencer’s “No Questions Asked” refund policy as well as Aldi’s “No
Quibble Guarantee”. Decathlon offers one-year (or more) warranty on all
Decathlon products. All Boots brand products are covered by a two-year
guarantee. Tesco prints on its private label products that: “We are happy to
refund or replace any Tesco product which falls below the high standard
you expect. Just ask any member of staff.”

Private label product information, such as nutritional information, written on

packaging or provided elsewhere in-store exceeds legal requirements and
is often found to be more extensive when compared to manufacturer
brands. Many retailers produce information leaflets, such as Tesco’s
healthy eating guide, featuring their private label products, or Boots’
medicine guides.

It is often easier and quicker to alter lower volume, private label product
specifications than higher volume, manufacturer branded products, in
response to changing consumer preferences. For example, some food
retailers have been quicker than branded manufacturers to exclude
Genetically Modified ingredients from their products, following recent
consumer concern.

The unit price and retailer competence influences the amount of trust a
consumer needs when making a purchasing decision. This relates to the
retailer’s core competence. Where the unit price is low the consumer is
more inclined to try a private label product, since the consequences of the
decision proving unsatisfactory are small. New private label products are
also more likely to be successful if they are considered close to the
retailer’s core competence. Therefore retailers can move transitionally into
new product areas. For example, retailers may initially offer loyalty cards or
credit before moving to a more comprehensive range of financial services,
as we have seen with many leading grocery retailers.

For some products, it is not so much a question of trust in technical

elements, but rather social credibility in these niche markets. This is
particularly true in high fashion markets. In these and similar upmarket
product categories, a generalist retailer’s regular store brand may be
regarded as being too downmarket. For example, Asda usually puts its logo
clearly on the front label of products, but on wine it uses hand-written text
to distinguish or mask (depending on your point of view) the Asdawine logo.

Finally, while some customers may only trust branded products, this does
not necessarily stop successful private label development. According to
KPMG Global Consumer Markets

consumer research, many customers of Marks & Spencer believe that they
never purchase private label products and that only branded ones will do22.
This is despite the fact that M&S only sell their own private label products.

Mintel Marketing Intelligence:

22

Own Label Food, November

1998. Mintel International
Group Limited, London

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

26
 7
Methodology

This research was carried out through extensive secondary research and
primary research during the second half of 1999 through the use of
retailer case studies. The primary sources of information are company
interviews, company documents (statistics, memorandum, annual reports
etc.) and observation. The focus of the study is on Western European
retailers and markets.

The Case Study Retailers

Retailers were selected because of the significance of private label to their

overall marketing strategy and as they represent different approaches to its
development. The chosen discriminators include: the retailing area, the
frequency of purchase, the role of private label within the retailer, the use
of fascia name, the share of sales of private label, the level of involvement
in product design, the degree of vertical integration and the market sector.

Aldi
Aldi is a very well-known example of a successful German discounter with
a very high (99%) share of sales for private label. It only operates a single
store format with small stores and a very limited product range with
individual names for each private label product. It competes on price, and
mainly stocks food, but also has short-term non-food offers.

Aldi offers its customers a unique combination of price and quality.

However, the consistency and total commitment throughout all operations
to reducing costs has been something that competitors have found very
difficult to copy, and the strong company culture created by Aldi’s founder
brothers probably plays a significant part in Aldi’s success. Aldi is totally
focused on its pricing strategy and private label is an essential tool to
pursue this strategy. Aldi expects its suppliers to undertake product
development. Total control and a uniform way of operation throughout the
company results in better efficiency, less complexity and provide Aldi with
the basis for its competitive edge.

Asda Clothing (George)

Asda is a major UK grocery retailer. It has strongly increased its private
KPMG Global Consumer Markets

label offer in recent years and has a private label share of grocery sales of
around 50%. It also stocks a wide selection of non-food items, such as
clothing, leisure and household goods. One of the major non-food ranges
and the main focus in this report is Asda’s successful clothing range called
George, which forms the major part of Asda’s clothing offer and is
managed totally separately from the main Asda brand.

Asda has been very innovative with George. By contracting the product
design to a high profile fashion professional and his team, Asda appears to

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

27
 Methodology (continued)

have achieved differentiation and therefore competitive advantage. In

addition to well designed products and a range that aims to match the
needs of its customers, it can be argued that George also gained credibility,
often lacking in supermarket clothing, as a result of the high profile of Mr
George Davies (the company’s founder and Managing Director).

Boots the Chemist

Boots the Chemist is a good example of a successful private label non-
food retailer. In its product mix, both private label and manufacturer brands
have their own important roles, the shares being around 43% and 57%
respectively. Boots has also successfully used sub-branding and has
exported its own branded products along with its stores. Boots is involved
in manufacturing, has a strong company brand and very high consumer
trust, especially in the company’s core areas of health and beauty.

Boots’ brand image has been developed over more than 100 years. In
addition to producing unique products, vertical integration with their own
factories reinforces the authority of the Boots brand. Boots gives a full
refund on products the customer wants to bring back and gives a two-year
guarantee to all Boots private label products.

Decathlon
Decathlon is a French sports retailer. It stocks both manufacturer brands
(45% of sales) and private label (55% of sales). The private label products
are in product categories that include some of the most advertised
manufacturer brands in the world. Decathlon has a number of differently
sized stores, either specialising in one sport or offering a wide range of all
sports-related merchandise. The majority of its stores are in France, with
current expansion to other European markets.

Private label is used in Decathlon as a tool to create an uniquely wide

product range in its specialist area, with various price and quality choices
for the customer. The depth, innovation and quality of the product range
combined with supporting product information and knowledgeable staff
help give Decathlon and its private label ranges credibility. The retailer’s
investment in product development and quality control plays an important
role in the success of private label products in both fashionable sports
clothing and more technical specialist equipment.

Marks & Spencer plc

Marks & Spencer is one of the most famous private label retailers in the
world. The company has been in the forefront of private label development
for decades and in many aspects, can be seen to have had great
importance in influencing the development of private label in the UK and
later, through its international expansion, in other parts of the world. In the
KPMG Global Consumer Markets

past, M&S has also been very successful in both its food and non-food
offer. It sells its own generic brands and has a reputation for good quality
and value for money. It does not own any factories but is closely involved
in product development and quality control at all stages of the supply chain.

M&S has achieved very high levels of trust from its customers, which
appears to have been achieved through heavy involvement in the supply
chain, strict quality control and a very flexible refund policy. By investing in
product development and strong supplier relationships, M&S has been able
to form a unique product range that aims to offer value for money.
© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

28
 Migros
Migros is the market leader in food retailing in its home country of
Switzerland. Migros serves a mass market with many differently sized
store formats and a wide range of products. It also has an exceptionally
high private label share of sales (around 95% in food). Migros is an
example of a vertically integrated retailer, operating in a relatively small
market. In addition to food, it also has a wide range of non-food products
as well as other services.

Migros is an exceptional retailer in many respects. It’s unique company

principles, set in the early years by the founder of the company, and a wide
range of business activities combined with a very dominant market position
sets it apart from most other retailers. Migros is unique in having an
extremely high private label penetration, even though it is a generalist
grocery retailer with a wide range of products. This has been made
possible through the massive vertical integration of the company. In
addition, private label has an important role in Migros by making the
company principles alive in the form of products – thus reinforcing Migros’
market positioning.

Tesco plc
Tesco has the highest market share in UK food retailing. Private label is
thought to have been of great importance in building its success and retail
brand. It operates many store formats and has a number of differently
positioned private label sub-brands though always in conjunction with the
Tesco name. Private label share of sales at Tesco is around 50%.

Tesco is a generalist retailer with a wide range of products especially in its

main business area, food. Private label has an important role in Tesco by
creating a range that gives customers more choice in terms of different
product varieties and price. However, brands still have an important role in
its ranges, leading innovation and in creating an attractive total offer for
Tesco’s customers. Tesco aims to achieve synergy in marketing by using the
store brand across all its store formats, services and private label products.

Technical Note

Statistical data on private label is variable. A common statistical measure of

private label is its share of sales in a product category, country or retailer.
The most usual sources of data are EPoS-scanning and consumer panels
conducted by market research organisations. However, the lack of standard
definition for private label within the retailing industry creates much
variation when comparing private label shares between retailers, categories
and countries.
KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

29
 8
Acknowledgments

KPMG and OXIRM would like to thank the following organisations for their
help in the preparation of this report:

AC Nielsen

Asda

Boots the Chemist

Decathlon

Lyon Business School

Marks & Spencer

Migros

SOK

Tesco

This research was conducted by Dick Bell, Richard Cuthbertson and Satu
Koskinen from OXIRM for Emyr Williams and Richard Clarke from KPMG.
KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

30
 KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

31
KPMG Global Consumer Markets

© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.

32
 For further details contact: For further information, please
contact KPMG’s Global
Emyr Williams
Consumer Markets group in the
[email protected]
following offices:
KPMG
UK
8 Salisbury Square
David P Clifford
London +44 (020) 7311 8962
EC4Y 8BB
http://www.kpmg.co.uk Ireland
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Telephone: +44 (020) 7311 8696 +353 (1) 410 1390
Facsimile: +44 (020) 7311 3311
Sweden
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+46 (8) 723 9358
Finland
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Austria
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+43 (732) 6938 2212
Norway
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+31 (20) 656 7580
Spain
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+34 (-) 9145 63400
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+33 (1) 556 87 080
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+36 (1) 270 7100
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KPMG Consulting

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+61 3 9288 5568
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+1 312 665 1488
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17
 For further information, please contact KPMG at:

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France Sweden
21 rue Dumont d’Urville Tegelbacken 4A
F-75116 Paris, France SE-111 52 Stockholm, Sweden
Tel: +33 (1) 56 89 60 00 Tel: +46 (8) 723 91 00
Fax: +33 (1) 56 89 60 10 Fax: +46 (8) 10 52 58
Web: www.fr.kpmg.net Web: www.kpmg.se

Germany Switzerland
Traubenstrasse 44-45 Badenerstrasse 172
10117 Berlin, Germany Ch-8004 Zurich, Switzerland
Tel: +49 (30) 2068 0 Tel: +41 (1) 249 31 31
Fax: +49 (30) 2068 2000 Fax: +41 (1) 249 23 19
Web: www.kpmg.de Web: www.kpmg.ch

Hungary United Kingdom

XIII Váci út 99 8 Salisbury Square
H-1139 Budapest, Hungary London EC4Y 8BB, United Kingdom
Tel: +36 (1) 270 71 00 Tel: +44 (20) 7311 1000
Fax: +36 (1) 270 71 01 Fax: +44 (20) 7311 3311
Web: www.hu.kpmg.net Web: www.kpmg.co.uk

Ireland Africa
Russell Court, Stoke’s Place South Africa
St Stephen’s Green KPMG Crescent, 85 Empire Road
Dublin 2, Ireland (Republic) 2122 Parktown, South Africa
Tel: +353 (1) 410 18 00 Tel: +27 (11) 647 71 11
Fax: +353 (1) 412 18 88 Fax: +27 (11) 647 80 00
Web: www.kpmg.ie Web: www.kpmg.co.za
Designed by IDP Design Consultants 020 8658 8858

Italy Middle East

Via Vittor Pisani 25 Bahrain
20124 Milano, Italy 5th Floor, Chamber of Commerce &
Tel: +39 (02) 67 64 31 Industry Building
Fax: +39 (02) 67 64 36 03 Manama, Bahrain
Web: www.kpmg.it Tel: +973 22 48 07
Fax: +973 22 74 43

The purpose of this publication is to give a general overview and not to provide specific advice relevant to any circumstances. It is recommended that professional advice
is sought before any action is taken. This publication is correct to the best of our knowledge and belief at the time of going to press.
© March 2000, KPMG, the UK member firm of KPMG International

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© 2004 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved.