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Buying Store Brand vs National Brand Products

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Being frugal is not just about finding good deals, it is also about finding whether the price paid is worth for the quality of the product purchased. It is about convincing your partner/spouse to think about saving and shopping wise. Adding to the list, it also about buying Store/Generic brand products vs choosing national brand name products. It is very important in this current tough economical condition.

This topic might seem old but it has recently picked up lot of attention and tracsion in past year or two. Main reason, recession. Many consumers are looking for ways and avenues to cut their cost and save some money for tomorrow because of employment uncertainity. At the same, many retailers and superstore giants took this as a golden opportunity and started pumping more money to their grocery list for creating or expanding their store brand choices. Their business model is to provide the same product with cheaper prices to attract customers with an ambition to grab small slice of big consumer market favoring national brands.

Little history won't hurt

According to the costco connections article published in Oct 2009, this store brand, private label might seem new to Americans but the trend has been popular in European countries long time ago. Actually, US used to have private label concept long time ago, example Sears launching its famous Kenmore appliance brand in 1927.

During 1960s and ’70s, national brands pumpled big bucks into TV advertising, converting many U.S. Consumers into national-brand loyalists and private-label lost their luster. According to the New York–based Private Label Manufacturers Association (PLMA), private-label market share in Switzerland is now at a whopping 54 percent (the highest in Europe), while market share in the United Kingdom is poised to climb over the 50 percent mark.

Private label/ Store brand started picking back up in US during late 1970's and early 80's when the recession hit. With no-frills, deeply discounted items—often of Questionable quality, store brand trend didn't last long but just merely become bit usual with regular products being branded and sold by super store gaints as store brands to attract customers by low prices. Current revolution is different compared to the previous one according to many analyst. According to many analyst, this time the revolution also made the retailers to concentrate on quality.They predict store brands will continue to do well, and grow, long after the current recession is over, thanks to advances in quality and innovation and better marketing strategies. We will have to wait and see.

Why you should try Store brand?

In fact, an article in the October issue of Consumer Reports pointed to an average 27 percent savings across store-brand products tested in 29 different food categories.

“Private Label 2009,” a study by Information Resources Inc. (IRI), a Chicago- based market research - notes that nearly 80 percent of U.S. shoppers now exhibit “positive attitudes” toward private-label products, up 7 percent from 2008. And those attitudes are working a bit of magic on sales. In fact, The Nielsen Company of New York reports a 7.4 percent gain in dollar sales within U.S. food, drug and mass-merchandise outlets during the 52 weeks ending July 11, 2009, reaching $85.9 billion and accounting for a 16.9 percent share of the overall market.

It’s very clear that the current recession has been instrumental in private labels’ recent stellar performance. A number of shoppers have admitted to trying store-brand products for the first time in the past year simply as a means to stay within their budgets.

In a recent consumer survey, PLMA found that nine out of 10 shoppers agreed that the private-label/store brand items they buy are just as good as—or better than—national-brand products. Moreover, almost half of the respondents indicated that they wanted their supermarket to carry a greater assortment of private-label products.

Not all Store Brands are made equal

Now every big superstore chain/whole sale clubs has their own store brand. Costco's Kirkland, Sam's MemberMark, Walmart's GreatValue, Target's Archers, Kroger, Safeway O organics, Sears Kenmore and list goes on. The super store chains and whole sale gaints are trying to penetrate in every product type possible to boost their business starting from cereal boxes to meat to ice cream to detergents to utensils and list goes on. Whether every one of their product is of good quality matching the national brands is big question in everybody's mind.

Many store brands are merely a clone of the national brand in product aspect but not all cereals are made same way. Not many companies are putting their effort in product innovation and quality. Many Super stores just partner with big manufacturers and label the product in their name. That's about it. But others spend their time and money to research and create their own products like Costco. You should identify them and buy from them to be sure that you are getting great quality and good price.

5 Things to consider when opting for store brands

  1. Price shouldn't be the only factor driving your decision. Compare the ingredients and check qualtiy.

  2. Anything can be given a chance once. So try it out once and make your decision as per your experience or check with your neighbor or friends.

  3. Don't be hard on yourself to buy every item from store brand especially food. Negotiate yourself and balance accordingly.

  4. Obviously give preference to buy Non-food products like office supplies and others in store brands.

  5. Finally, Generic brands are same chemical composition as brand names and can be trusted for the quality but don't always assume a particular store brand will be always of good quality compared to national brand. Assumption is dangerous.

In conclusion, be watchful, be frugal and buy smart. Walmart has gone to great heights by creating its own branded cell phone plan called "Family Plan" tieing up with TMobile service provider.

Read more about the Private label Vs National Brand from the costco article published in costco connection magazine last year.

Image: Costco connection magazine

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