Of Strength And Store Brands

Steve RivkinJanuary 15, 20094542 min

Of Strength And Store Brands

There is a seismic shift underway in store brand names. They are much more powerful than a decade ago, when they were rarely advertised and often packaged anonymously.

Today, store brands offer better quality, better design – and better names.

One of five items sold in U.S. stores in 2005 was store-branded. In Europe, the percentage is slightly higher. By 2020, sales of store brands are expected to reach 30% of the worldwide market, according to London-based M+M Planet Retail.

Two quick examples:

  •  Wal-Mart’s brand of dog food, Ol’ Roy (named for the founder’s pooch) has quietly passed Purina as the world’s top-selling dog chow.
  • 7-Eleven introduced its own beer, dubbed Santiago, to steal share from the Mexican import Corona.

At the grocery goliath Kroger, there are more than 4,000 privately branded food and drink items.

At the French marketer Carrefour, a major internal branding program emphasizes quality, image and innovation. These store brands are not designed to sell merely on the basis of price. They are carefully named and positioned to elbow others off the shelf.

How much better is the quality?

In 2005, Consumer Reports tested 65 products in six categories (facial tissues, paper towels, plastic bags, canned peaches, French fries and yogurt). The magazine’s conclusions: “Many store brands are at least as good as national brands. Switching to a store brand can cut the cost of a product by as much as half.”A blind taste test asked 300 consumers to sample 1,800 products in 10 geographic locations. The test included store brands from Safeway, Wal-Mart, Trader Joe’s and others, going up against brands such as Betty Crocker, Maxwell House and Minute Maid. Overall, store brands rated just as highly as their national counterparts.

And better design? No question about it. Packaging is more attractive now, and gets more time and attention from staff and outside designers. The overall effect: Store brands look more authentic.

And store brand naming has taken a leap forward. Internal brandmeisters now weigh competitive names against the attributes of their own brands. Their names reflect crispness, communications platforms, and eye and ear appeal. Consider:

  • Wal-Mart’s store brands, such as Great Value bleach, Sam’s Choice tuna, Spring Valley vitamins and Equate analgesics, make up a big chunk of total store sales.
  • Safeway created a signature brand of beef, Rancher’s Reserve, and has heavily promoted it to compete with higher-priced national brands.
  • Kroger offers a line of “life’s little pleasures” (macadamia nuts, Canadian maple syrup, extra-virgin olive oil) under the Private Selection banner.
  • A&P’s commitment to quality store brands goes back to 1994, when it launched America’s Choice (everyday products in 170 categories), Master Choice (specialty items) and Health Pride (OTC and personal care items).
  • Stop & Shop Supermarkets introduced Nature’s Promise, a line of natural and organic foods; and MiCasa, “for those with a taste for authentic Latin food.”

Bottom line: Expect more and better house-brand names.

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4 comments

  • Christopher Durham

    January 15, 2009 at 11:50 am

    Great post, private brands are the subject of my blog and there is never any shortage of news about them. As retailers take more power in this soft economy they have the ability to create “real” brands and learn from the last 50 years of CPG based brand management to create brands that truly engage the customer, all with guaranteed shelf space.

  • David

    January 19, 2009 at 10:48 am

    There is a considerable shift in how retailers are repositioning their brands. It’s about understanding what the customer is looking for and positioning the brand around that. I did a post on how Kroger’s is expanding their store brand into ready meals, since there is a growing trend with the recession on what types of meals families are buying. Retailer’s like Kroger’s is smart to be flexible enough to move with the trends, keeping them on top.

  • Tom Stockwell

    January 25, 2009 at 10:50 am

    Twenty five years ago when “generic” brands first hit my consciousness, if not in fact the market place, the “branding” was designed to tell the story that they were a cheap but serviceable alternative to the real “brand name” products. The stenciled font used clearly identified them as taking very little effort in packaging cost and offered a tremendous value and price savings. As a young couple my wife and I made ends meet with these un-branded brands.

    Today even though our household income is substantially greater house brands STILL fill our shelves. Whenever we feel that a house brand is about equivalent to the leading brand we will invariable pick the house brand and typically save a bundle.

    I get the fact that a leading brand might deliver some level of comfort and satisfaction to a consumer simply by having the most recognizable name. However the advance of house brands points to a shift in consumer behavior, expecting a greater tangible value for their loyalty. The closer a brand can effectively target products to the increasingly unique demands of the individual consumer, the more likely they will build a loyal following including garnering a premium price.

    An Example. I wear Adidas Climacool running shoes. In my mind there isn’t a pair of shoes that compares to these on the marketplace. When I run my feet tend to overheat and that increases the stress of running. These shoes are super ventilated and breathe like no other and they fit my feet perfectly. As a result I’ve fallen in love with them and wouldn’t run in anything else. When a brand can target a product effectively, at a specific need, to a specific market segment, they will hit a home run nearly every time. And if that same targeting spills over to their other products that loyalty will extends to other products they offer as well.

    House brands are making their stand with product categories like facial tissue, mouthwash, OTC medications, laundry detergents, cereals and many other commodities. You’ll find all these and many more house brands on the shelf in my house. However just because the house brand exists doesn’t mean it’s better. I love Kellogg’s Special K with Red Berries. I’ve repeatedly tried to find a house brand alternative and have failed to find anything with an equal taste profile. I will remain loyal to Special K until someone offers me something that beats it.

    Inevitably competition will drive the innovation of the value proposition and consumers will reward house brands that raise the bar. Unfortunately in some cases that often puts the major brands in competition with themselves and undermines their ongoing profitability. An example of this is found in your example of Wal-Mart’s Ol’ Roy dog food. This is manufactured by Mars Inc. who is one of the world’s largest manufacturers of pet foods including brands such as Pedigree. I wonder if this trend worries them.

    The consumer wins every time someone innovates the overall value proposition so let’s all cheer on the innovators whom ever they may be!

  • Ted Grigg

    January 25, 2009 at 9:54 pm

    Excellent observations.

    Not only have stores improved house brand marketing, but they have also stepped up quality control. This makes trial of the lesser known house brands less risky from the customer’s perspective.

    In the past, food products, for example, used to be inferior to the better known brands. Not so much anymore.

    Stores have definitely improved the quality of their packaged products.

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