Store Brands No Longer So Generic

It’s common knowledge that store brands are thriving as consumers feel the pinch of economic hard times. But some of these private labels may be in a position to keep their market share even after the economy gets back on its feet again. Rather than merely relying on their low prices to attract and maintain customers, private labels are behaving more and more like regular brands and no longer focusing exclusively on price.

The quality of private labels has risen to the point where in some cases, the private labels are better than the national brands. Retailers are also focusing more on marketing the own brands, and last fall Safeway even made its products available to competitors.

And, far from just producing cheap and generic versions of established products, private labels are starting to innovate. In fact, innovation will be the theme of the Private Label Manufacturers Association’s next trade show.

In some ways, private labels even have an advantage, according to Tony Keller, president of TandemRain Innovations consulting firm, because “they aren’t afraid to put [new products] on the shelf.”

He added that a marginally successful product is totally acceptable, whereas brands will only introduce innovations that are sure to be a total success.

“That leaves everything between marginally successful and totally successful open for the Private Label brands. That is a lot of successes.”

It doesn’t hurt that customer regard for store brands has never been higher, as showed in a forthcoming report by J.D. Power and Associates.

“It’s clear that consumers have begun to discard the idea that private label brands are of lower quality than traditional brands, which provides an opportunity for retailers to differentiate themselves with high quality, reasonably priced store brands,” said Janet Eden-Harris, vice president of J.D. Power and Associates Web Intelligence Division.

This is mainly true for the food industry; customers don’t care so much about the quality of generic toilet paper or cleaning supplies, the report found.

But for organic private label products, quality is of particular importance. Brands that stand out for customers, according to the study, include those of Safeway, Trader Joe’s and Whole Foods, and though the price is a bonus, flavor and nutrition are the primary characteristics that hold customers’ attention.