Private label usage of European HVAC installers; how big is it?

Private labels are a fact of life.

Dirk Hoogenboom

Door Dirk Hoogenboom
16 sep 2016
Installatie,

Private labels are a fact of life. We constantly encounter them, whether we are doing our groceries or when browsing in the DIY store.

Private labels are not only visible in the consumer market, but also in the B2B environment. In this post, we will take a closer look at HVAC installers and their attitude/share of wallet (SOW) towards private labels. We already know which products are most likely to be replaced by a private label.

We found that the product categories where the most private labels are being used are fixing products, pipes, radiators and so on (differs per country). Furthermore, in most countries the majority of the installers perceive little to no difference in quality for these products.

In a previous post we also looked at the different types of HVAC installers and their behavior. We identified 4 different installer groups; digital, progressive, open minded price focused and conservative price focused.

In this post, I would like to combine these results. Are there differences in the SOW between these groups and the usage of private labels?

In general, it appears that in all 4 segments the biggest SOW goes to the preferred manufactures brands. However, for the more price focused installers (conservative or open minded) the SOW of private labels is already around 25%. With the digital and progressive installer this percentage is lower, 18 and 20% respectively.

When asked if the usage of private labels will grow, stay equal or decline, most installers (in all 4 groups) stated that they expect the usage to remain equal.

Furthermore, a majority of the installers in all 4 groups use their favorite brands if possible. The open minded price focused installers are most inclined to easily switch between brands (22%). This is lower with the other 3 groups (around 15%). Still, when you think about this, it is still a potential big opportunity for the private labels.

So we can conclude that the SOW of private labels is already quite significant at around 22% on average. The installers themselves think that the usage of private labels will remain the same. On the other hand, the potential for further growth of private labels is there with an average of 17% of the installer’s state that they will easily switch between brands.

We will continue to measure this to see if the usage of private labels will change in the upcoming years.

These are some of the results from the latest Q2 2016 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. For more information please feel free to contact me at hoogenboom@usp-mc.nl