Remember when store grocery brands used to come in generic packaging? You know: plain white packages with black stenciled lettering, no brand names and just a one word descriptor as to the products inside: CAKE MIX, CEREAL, DOG FOOD...
Those days are gone forever. And so is the supermarket practice of merchandising their own brands on bottom shelves covered in dust. Private label brands have steadily grown in volume, sophistication--and respectability.


In tough times, more and more consumers pick up grocery store brands to save money. As long as the quality and packaging speak to them, that is. A recent article in the Houston Chronicle, "House-label groceries are a new brand of thrifty," points to this growing consumer trend.
How prevalent are store labels now?
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The Private Label Manufacturers Association reported sales of retailer branded products rose to $80 billion in the year that ended in September, up from $73 billion in the preceding year.
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Kroger's private label brands represented 26% of the chain's total volume as of this past June. The retailer stocks 14,400 PL products, up from 7,800 in 2003.
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H-E-B, the San Antonio based supermarket chain, reported that store brands continue to outsell national brands in its stores.
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Trader Joe's has carved a unique niche for its retail operation by making private label offerings a staggering 80%+ of its total merchandise mix. More than 2,000 private label products account for approximately 70% of Trader Joe's volume, according to Hoover's.
As the article points out, when consumers feel financially squeezed or unsure of job security, they're bound to pinch pennies. Still, consumers aren't just buying store brands to save money. Private label foods have to do more than cost less. According to the article, and corroborated by my own firm's research, consumers are turned on by:
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A perception of quality and great taste.
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Sophisticated, in-demand new offerings.
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Great packaging that rivals that of national brands.
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The association of PL brands with a particular retailer and the establishment of a preference for that retailer because of its store brands.
If these conditions are met, store brands can ensure increased volume and profit margins, and retailer loyalty. At a time when retail stores are coming under more pressure due to falling consumer spending, doesn't it make sense for them to invest in their own store brands?
Questions:
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Are you more likely to purchase store brands when your budget is tight, or do you buy private label brands regardless?
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Which store brands do you prefer and why?
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Are there some categories where you prefer to purchase national brands? Which brands, and why?
I'd love to hear from you.