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Tesco boss warns locals of limits to private labels

One of the world’s most successful supermarket bosses, Terry Leahy, who took the UK chain Tesco from a struggling, third-ranked competitor in its home market to one of the biggest grocers in the world, has a message for Woolworths and Coles: there is a limit to how much private label goods can dominate their shelves.

Terry knows what he is talking about. Tesco helped drive the proliferation of private labels in UK’s supermarkets, and when Woolworths revealed its new strategy last year to match a resurgent Coles and improve its own bottom line, it named Tesco as the world’s leading supermarket when it came to house brand penetration as a proportion of total sales.

”Like so many strategies it depends on how you execute,” Terry told BusinessDay from London. ”The UK consumer has always trusted private label, as much as anything because of Marks & Spencer, and Marks & Spencer is 100 percent private label, and so the UK consumer were used to that offering and then Tesco developed it for a wider market and has had a lot of success."