PRIVATE LABELS are taking retail by storm, and they don’t plan to stop anytime soon.
It’s called the Publix Brand Challenge, and it’s as close to a callout as you’ll find in the grocery industry. Several times a year, the Publix Super Markets chain in the Southeast pits three to five of its store-brand products against their national-brand equivalents: Downy Fabric Softener, Aunt Jemima Original Syrup, etc. If customers buy one of the featured national-brand products, they’ll get the Publix store-brand version for free. “Buy theirs, get ours free,” the ad trumpets. “We think you’ll prefer Publix.”
That’s not an idle boast. Over the past several years, shoppers nationwide increasingly have been passing over familiar national brands to try store brands, also known as private labels. According to Nielsen Company numbers published by the Private Label Manufacturers Association (PLMA), store brands sacked up a record $60.4 billion in sales in U.S. supermarkets in 2013, accounting for 23.3 percent of unit shares in supermarkets. Including other sales outlets, store brands rang up $115.2 billion.
These are not your parents’ (or grandparents’) “generic” store brands from the 1970s, with the white label, low price and even lower quality. Retailers as diverse as Whole Foods Market and Dollar General are investing in store brands. Some retailers juggle between 12 to 20 store brands under one roof, diversifying their lines with organics, gourmet goods and even pet food. While cost-saving remains their primary selling point, today’s store brands are often formulated to rival or, in some cases, surpass the quality and appeal of national brands — and to serve as a point of difference in the crowded marketplace.
“For Coke or Tide or other products everyone sells, a shopper can compare prices and buy it at any store in America based on where it’s on sale,” says Christopher Durham, a private-brand consultant who runs the influential industry website My Private Brand (www.mypbrand.com). “But if you have a great store brand, it gives you the opportunity to build strong, unique relationships with your customers because the customers must come back to your store for it.”
Ever since A&P supermarket put its name on household staples in the 1880s, store brands largely have been a value play for the consumer and retailer alike. Retailers typically don’t spend near the advertising dollars on store brands that the mass-marketed national brands must invest. The retailers pass on those savings in the form of lower prices on their store brands. Indeed, PLMA surveys find that shoppers who choose store brands could save around 30 percent on a grocery basket of typical goods.