Private labels: Their popularity in the HVAC sector explained
Rotterdam, 11th November 2015 Private labels have gotten much attention in the past few years, not only in the consumer market, but also in the installation market. European installers choose private labels most often when shopping for fixing products and systems. The most important reason for choosing a private label is the price difference with top brands, although the lack of difference in quality also contributes to the popularity of private label HVAC products. Private labels have gained most popularity among installers in France and Belgium, compared to the other countries. These are some of the results from the latest Q2 2015 report of the European Mechanical Installation Monitor. The survey is conducted on quarterly basis among 1,200 HVAC installation and plumbing companies in 6 European countries.
When installers buy HVAC materials, they often have a choice between several premium brands and private labels (i.e. brands of the wholesalers). Private labels are often positioned as lower-cost alternatives, however the quality can differ. For the installation market, it is interesting to see which products have the highest share of sales through private labels and what the motives of installers are to buy such private label products.
Which types of installation products are most popular when it comes to private labels?
In most countries, fixing products and systems are in the top 3 of products with the highest share of private label purchases. Air & dirt separators, air vents and pipes/tubes and fittings also often appear in the top 3. The share of private labels differs per country. Whereas in the Netherlands, the 1st most popular product only has a private label share of 23%, in France and Belgium even the 3rd most popular product has a share of about 40%. In this respect France and Belgium seem quite similar and can be outlines at the two countries where the private label brands are very popular.
Is it only price that drives installers to buy private labels?.
As mentioned before, private labels are often positioned as lower-cost alternatives. This is indeed the main reason installers buy private label HVAC products (see table below). The price of products from private labels is more attractive or substantially lower than branded products. Another reason for the purchase of private labels that prevails in Poland, France and Belgium is that the quality of the products is similar to those of the well known brands; there are no big differences between the products. When specifically asked about the differences in quality, a majority of the German and French installers thinks that the quality of private label HVAC products and the well known brands are relatively similar (data not in table). In the other countries, there is more doubt and opinions differ on this topic. Next to these reasons to choose a private label, many installers from the UK also note that the products from private labels are easy to find and always available at the wholesalers.
Trends in purchases of private labels
Installers from the investigated countries do not agree on the evolution of the use of private label HVAC products (also see figure below). The use of HVAC private labels by installers has been rising in France, Germany and Belgium. This cannot be said for the Netherlands, the UK and Poland. As was shown in the first table, the Netherlands currently has one of the smallest shares of private label sales.
The construction sector is stabilising, but not everywhere at the s...
March 2020 Lockdown turning point for construction volumes The lockdown destroyed European architects’ opt... Read more
Online trade fairs not very popular with European architects
One way in which the construction industry has been impacted might be less obvious, but the impact is very ... Read more
COVID is keeping painters busy
Painters in the Netherlands are busiest; an average waiting time of 8.5 months USP’s Painter Insight Mon... Read more