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Spinneys bets big on sales growth for own-label goods

Sunil Kumar, CEO of the supermarket chain, says private-label sales account for 42% of its revenue Spinneys
Sunil Kumar, CEO of the supermarket chain, says private-label sales account for 42% of its revenue
  • Interview with CEO Sunil Kumar
  • Margins higher on private label
  • ‘One of the reasons we are resilient’

Supermarket operator Spinneys is betting big on strong sales of its private-label products as it prepares to go public next month, CEO Sunil Kumar told AGBI on Tuesday.

Its private label – or own-brand – ranges cover food, toiletries and household goods. The retailer also has exclusive rights to sell Waitrose-branded products from the UK supermarket chain. 

Kumar said private-label sales accounted for 42 percent of Spinneys’ revenue, slightly above the share of global peers.

Germany, the UK and France had an average private-label market share of just under 40 percent in 2023, according to NielsenIQ research commissioned by the Private Label Manufacturers Association International Council.

The organisation tracked sales across 17 European countries and said consumers had “massively switched” to own labels in 2023 because of concerns about high inflation and the rising cost of living. 

“Our revenue being generated from private-label [products] is growing,” Kumar said.

“This is one of the reasons why we are resilient within the inflationary environment. We have maintained our margin performance.”

In 2023 Spinneys reported sales of over 7,200 stock items from its own and Waitrose’s brands. 

The company said these products were at least 10 percent cheaper than branded alternatives, with discounts of up to 60 percent on some items, making them attractive to cost-conscious consumers.

Worldwide, household spending on own-brand goods increased at more than double the rate of spending on branded products last year, according to a report by consulting firm Kantar.

Gross margins for private-label groceries average around 35 percent, compared with 20 percent for branded products, Kantar said.

Kumar added that the company’s “integrated, solid supply chain” – its sourcing capability, production unit, logistics system and freight forwarding – guards against potential disruptions, such as those caused by the Red Sea crisis

“As of now, we don’t see much of a disturbance for us,” he said. 

“We have a solid relationship with the freight forwarders. If there is a problem in shipping, we can air freight. We have navigated around the challenges particularly because we have our own capabilities. We don’t have a middleman or intermediaries helping us do business. We are a self-reliant business model.”

Shares in the company, which operates 75 supermarkets under the Spinneys, Waitrose and Al Fair brands in the UAE and Oman, are expected to begin trading in Dubai in May.

“This is a private sector business with a profitable growth story, balanced with a dividend plan,” Kumar said. 

“This is entirely different than what you have recently seen in IPOs in the UAE market.”

Spinneys’ revenue grew to AED2.9 billion ($790 million) in 2023, at a compound annual growth rate of 8.2 percent from 2019. 

Profit for the year 2023 stood at AED254 million, up nearly a fifth on 2022.

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