Tesco Malaysia’s growth rate is slowing, reaching RM4.59 billion in 2012/13. Interim growth for the first half of 2013/14 declined to 4.5% from 14.1% two years ago. The rapid decline in revenue to 1.8% in the first half of 2013/14 at GBP terms was due to the weakening ringgit versus the pound, down by 10.6%.
To arrest the declining growth rate, Tesco is turning to own brand products or private label, which offers products at comparatively lower prices without compromising on quality. For example, the 400g pack of Tesco Chicken Flavoured Instant Noodle (80gx5) is 22.12% cheaper than the 385g pack of Maggi Chicken Flavoured Instant Noodle (77gx5) on a per unit price basis.
Tesco has also made available its private label range on its online store. At the time of writing, the are 1,850 Tesco own brand products on the site ranging from office, arts and crafts (191 items) to laundry (51 items).
Tesco’s bet on private label is a calculated move to meet the needs of price-sensitive consumers. The primarily challenge for Tesco now is getting consumers to accept its own brand products.