By David G. Jackson
House brands–you know, the canned goods at the cheap end of the shelf at your local supermarket–they’re inexpensive and taste OK if you aren’t particular. At least that is a common perception of private labels among many otherwise knowledgeable consumers. However, this opinion is changing as more and more companies, from major grocery chains to specialty shops and restaurants, are upgrading their house brands and customers’ attitudes along with them.
A study conducted by Phil Lempert’s Supermarket Shopping and Value Guide reports that store brands (or private labels) have shot to the top sales position at supermarkets with nine out of ten shoppers buying store brands from time to time. Why? They cost less than national brands and usually offer the same quality. And sometimes the store name carries even more weight with consumers than does a national food brand. One of the world’s great stores, Harrods in London, England, for instance, uses only “Harrods” private label products in its internationally famous food section, selected from manufacturers all over the world. In the U.S., a classic example of this are the Trader Joe’s specialty markets, where 90 percent of all the products in the stores are private labeled.
According to Lempert, “Now that supermarkets cater to many customers’ gourmet tastes, store brands often equal or surpass the quality of name brand items.” Most major grocery chains have food-testing experts and laboratories that evaluate their store-brand products for quality and then send them to vendors for their opinion.
The Private-Label Revolution
Store brands started at about the turn of the 20th century. Their popularity grew progressively until national brands began advertising on television, an expense that many local and regional chains could not afford. A recession in the early 1970s fueled a resurgence in private labels because food shoppers wanted bargains. Retailers began to offer “generics” that were low-cost standard-quality products, often packaged in austere, minimalist wrappings that reflected the general retail climate. According to many consumers the flavor of these products was commensurate with their appearance.
When the economy began improving in the 1980s, shoppers started to purchase nationally-advertised brands again. Retailers responded by improving their store brands’ quality as they expanded the variety of private label products. Many firms developed “premium” private labels that were designed to compete with leading brands, and in some cases to surpass their quality and price. And they were profitable, mainly because they didn’t include the markup for costs of national advertising. Indeed, many of the store brands were simply repackaged national brands.
Lempert recently made up a fifty-four-item shopping list that was submitted to four of the nation’s top supermarket chains. The plan was to place all of the store brands in one basket and national brand products in another, add up the bills and compare the two. The total prices for each of the four baskets of national brands were within a couple of dollars of each other. The store brands ranged from $24 to $44 less expensive than the national brand names.
This is not a complete story, as Lempert stressed. You still have to compare the quality and taste of store brands, in addition to price. Compare ingredients lists, package sizes and net weights with the national brands. Read carefully to make a meaningful comparison.