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Store brands crowd out national products

Retailers from Wal-Mart to Staples are increasing the number of private-label products and cutting back on name-brand goods.

By Teresa Mears Feb 16, 2010 3:48PM

Are you noticing more store brands and fewer national brands on shelves when you shop?

 

We’re not sure which came first, but as customers seek to save money by turning to cheaper store brands, retailers are seeking to maximize profits by increasing the number of store- brand products they offer. In some case, that means some national brands are being pushed off the shelves.

 

Wal-Mart recently quit carrying Glad and Hefty storage bags to devote more space to its Great Value brand of bags, CNNMoney reported. But if you’ve missed those Hefty bags, you’ll be glad to hear they are coming back, after Wal-Mart made a deal with Hefty’s parent company to manufacture the Wal-Mart brand bags.

It has long been a mantra of frugal shoppers that generic is cheaper, and in the decades since generic products were introduced, stores have replaced the no-name items with their own brands of goods. Stores from Wal-Mart to Target to Staples to Whole Foods, plus all the other grocery chains, sell their own brands.

 

Often the store brand is indistinguishable from the national brand (sometimes it’s made by the same company), and the companies have sought to build a name for their own brands. Both Target and Wal-Mart redesigned their private-label brands last year and expanded the number of products.

 

Private-label products cost 5% to 20% less than name-brand products, plus are more profitable for stores, according to a BusinessWeek story detailing the Wal-Mart brand makeover.

Citing the Nielson Co., The Boston Globe reported that sales of private-label goods have risen 8% since 2007, while sales of brand-name goods have gone down about 4%.

 

Customers like Elizabeth O’Herron of Boston, who estimates she saves $50 a month by buying store brands, are one reason for the trend. “I am not loyal to any grocery store or any brand,’’ she told The Boston Globe. “I am loyal to savings.’’

 

Consumer Reports did a blind taste testing of 29 food items and found that 19 of the store-brand foods tasted equally good and four tasted better. The national brand tasted better in only six categories. The store brand cost an average of 27% less, the magazine reported. “Price gaps have less to do with what goes into the package than with the research, development and marketing costs that help build a household name,” the magazine reported.

 

Eliminating national brands in favor of store brands doesn’t apply just to groceries. The Globe reported that Staples, the office supply store, also emphasizes its own brands and doesn’t even carry national brands of some items, such as shredders.

 

At Thrifty Fun, readers shared intelligence about which companies make which store-brand products. One reader noted, for instance, that J.A.N.E. brand cosmetics, available at Wal-Mart and other discount stores, are made by Estee Lauder.

 

We find buying store brands easier and more economical than bothering with coupons. Where do store-brand products fit into your shopping strategy? Are you seeing more private-label items in your stores? Do you like the quality? Have you noticed any national-brand items missing in the stores where you shop?

 

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