Shoppers buying more store brands - East Valley Tribune: Business

Shoppers buying more store brands

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Posted: Sunday, August 3, 2008 9:54 pm | Updated: 9:58 pm, Fri Oct 7, 2011.

CINCINNATI - After watching the price of her favorite bread rising too quickly, Michele Shores decided it was time for a fresh approach.

When her usual bread went from $2 to $3 a loaf, she began purchasing store-brand breads, such as Wal-Mart Stores’ Great Value and Kroger Co.’s private label, which are also available at its Arizona subsidiary, Fry’s Food & Drug Stores.

That’s less than half the price, and not half bad.

“My husband takes his lunch to work and we all eat a lot of sandwiches here,” said the 30-year-old mother of two from Atlanta. “So that’s a lot of money for us.”

As budgets get tighter and food gets more expensive, American shoppers are increasingly switching to store brands — even upper-income consumers who may not have been inclined to give them a try before.

The nation’s biggest grocery-sellers, Wal-Mart, Kroger, Supervalu and Safeway, all report that sales of their own brands are jumping, as customers can’t stop regularly buying food and household items but need to reduce spending.

“There are things we can do to drive less, but how do you eat less? You don’t,” said Erin Frehner, a Brigham Young University senior.

Frehner said she and her husband, both full-time students with part-time jobs, always try to get the store brand unless they strongly prefer the national brand or if the price is almost the same.

The Food Marketing Institute, an industry trade group, found this year that the number of shoppers who say they are buying more store-brand items has been steadily rising, now up to some 60 percent.

That shift comes as the chains are offering more store-brand products of better quality.

Gone, for the most part, are the gray, no-frills cans with nondescript labels such as “peas,” packaging that evoked cheap, bland taste. Many now sport colorful labels with names like Kroger’s “Private Selection” and “Naturally Preferred” that don’t shout “store brand!”

The stores have been pushing their own brands in areas such as dairy products, meats and breads where prices have risen especially fast, and are also tapping into increased demand for organics and natural foods.

“Store brands have come a long way,” said Tod Marks, a senior editor at Consumer Reports, which has tested store brands against national brands for quality and customer response. “Over the years, retailers realized that store brands were not just something to be floated out during hard times ... ‘This is a signature product of ours. We want to be known for this.’”

Stores generally reap better profit margins by selling their own brands — also called corporate brands, private labels or generics — and also use them to build customer loyalty.

“All of us are creatures of habit, and when things are going well, you just buy what you bought last week,” said Kroger’s vice chairman, Rodney McMullen. “Customers are much more willing to try a corporate brand when the economy gets tough, and when we can get the customer to try it, they like it. It just makes it so much easier for us to get the customer to try it.”

Surveys have shown that most people were highly satisfied with most store brands, Marks said, and testing found many of them held their own against the national brands. In some cases, he said, consumers must decide whether “good enough” at a lower price is better than buying a national brand.

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