Looking for Quality and Value? Don’t Forget Store Brands
You engage in your weekly grocery shopping and come to that choice in every section on your list. Do you buy the store brand or the…
In my latest trip to the grocery store, I found a name brand box of six individual servings of non-fat plain Greek yogurt. The unit pricing for the store brand was $2.03 per pound and the name brand was $2.86 for the same weight. It translated to $2.69 for the store brand box and $3.79 for the name brand. I eat non-fat plain Greek yogurt regularly. Do I buy the store brand or the national brand? Is there a difference? In fact, why do store brands exist?
Well, as much as those are serious questions, store brand manufacturers say that all their products are of the same or even greater quality than the nationally known brands. When applicable, they meet the same standard required by law.
These brands are an industry unto themselves with players including national labels, store brand specific manufacturers and even stores themselves.
Once called generic, professionals refer to them as private labels. They form a huge industry that has its own trade organization: The Private Label Manufacturing Association, its own magazine and even hall of fame.
For example, you will find a wide variety of store brand products at all the major supermarkets but you will find each private label nowhere else because that is a brand specific to that store and or its affiliates. You can find a whole array of offerings from aspirin to yellow mustard under the same brand as well as you can for every other respective store brand of every type of store from furniture to food.
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Some product manufacturers are easy to identify as they have their logo on the can at or near the store brand logo or in the fine print. Others are virtually impossible to discover without some serious digging and even then they may remain unknown.
When you shop for medicine, for example, you will see the brand name remedy and usually the store brand next to it. Many times there is a significant difference in price. Which do you choose? Well which is going to get rid of your headache, stuffy nose and sneezing effectively at the lowest cost? That is the question to answer.
Why do they exist at all?
There are many reasons:
According to the Private Label Manufacturing Association the sources of these products also reveal the reason.
Companies can offer store brands with manufacturing resources, space and expertise not used by their nationally marketed brand. So, if there is a market for their brand name of widgets, for example, they may increase their output by offering the private label product too.
Other companies specialize only in producing store brands and can offer products focused on a specific store’s customer base and even demographics.
The national brand may sell well in most of the country but their store brand may sell better in certain regions with packaging tailored for that area.
Still, stores themselves may choose to manufacture their own products and private brands.
Every store brand reports that they have to meet the same standards as the national brand and even stores demand the same or better quality.
Many will question whether store brands’ lower price translates to lower quality, but manufacturers and stores insist that is not true. There are other expenses that go into the price of that bottle of olive oil that have nothing to do with quality.
The key example is marketing. I learned this by checking the advertising prices of a local newspaper sometime ago. At the time, a full page ad was $64,000, a half page was $32,000. In our area there are three major car dealers that were advertising daily in that newspaper on top of other advertising venues: TV, Billboards, for example. Everyday you would see a full or half page ad from those retailers in that venue alone.Their advertising budgets must be huge.
A smaller car dealer ran a TV ad asking why consumers shop at these car dealers when a portion of the price of the car goes for those exorbitantly expensive ads. These are huge costs passed on to the consumer.
Every major brand has a large advertising budget and follows the same pattern. Store brands do not have the same marketing cost because they do not engage in national advertising. Their promotion is part of the stores’ overall advertising cost which is spread across a huge number of products — name brand and store brand. This will significantly lower the cost of the private label product, even if the ingredients are literally identical.
Mayonnaise is a multi-billion dollar industry. Through its private label distribution, stores themselves can enter into that market even if at a lower level than the more well known national and local brands. Even if a brand is not at the top of such a popular product line, it still benefits from its share of a an industry that has revenues north of 5 Billion dollars.
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National stores can also tailor their products to the region. According to a recently published report in BuzzFeed, peanut butter is the number one condiment in Vermont but mayonnaise is number one in Nevada. Again, through private labels, stores can focus on what sells best for each region and still participate in the market.
So when you walk through the store and see the name brand and store brand, which you choose comes down to the age old question that every shopper knows: “Which offers me the most value?” Often times, it can be the store brand.
