Why Store Brands Are Good for Consumers

Strolling down the aisles of my local big name grocery stores, it’s as if there’s a magnetic force field around all the store brand groceries—something that repels me from buying labels like Market Pantry and Great Value.

Because of brand loyalty and the lingering stereotype that generic brands make lower quality products, this force field feels real for many other shoppers, as well.  

But, despite this negative impression, in the past 30 years store brand sales have actually increased from accounting for 10 to 15 percent of all grocery sales to 25 percent. And, according to a new study from the University of Florida, that percentage will only continue to increase.

Why? Not because shoppers have stopped playing favorites, but because store brands have invested in making high-quality products, slowly enticing more and more shoppers like me.  

How store brands became better

The study, conducted by Woochoel Shin, follows the history of store brands and traces their improvement over the past 30 years. According to Shin, although store brands used to be pretty bad in the 1980s, hence the lingering, sour stereotypes, in the past three decades retailers have been making an effort to create good products to compete with national name brands.  

Store Brands pbs rewire
Source: University of Florida

One tactic used by Target, Walmart, Costco and other big-box chains is the implementation of multi-tier store brands. This means that, along with their lowest priced products, stores also offer higher-end items to compete with premium brand name products.

For example, Target offers both Market Pantry coffee for $5.99 and the higher-end Archer Farms for $6.89. They are both Target brands, but one is made to compete with a different tier of national brand.

Providing both of these options appeals to a wider range of consumers, many of whom might not realize that Archer Farms is, in fact, a Target brand. Another reason store brands are proliferating, according to CNBC, is that during the recession more shoppers turned to cheaper store brands and have continued to buy them since.

Why this is good news for us

Store brand growth is not limited to grocery stores. It can also be seen in home improvement, office supply and other big-box stores. According to Shin, the increase in diversity in store brand products is a good thing for consumers. Generic brands investing in quality will challenge national name brands to bring down their prices while continuing to provide a good product.

“Store brands put more pressure on national brands to make a better product at a cheaper price,” Shin said in an interview with the University of Florida. “The overall average price for the category is going to be lower with the introduction of the store brand, so it helps consumers.”

The diversification of pricing also means that while those looking for something more high-end can purchase the premium store brand products, retailers can still offer cheaper, generic alternatives, which provides products for another economic bracket.  

Store Brands pbs rewire
Source: TIME Magazine

Why national brands are sticking around

At the end of the day, it’s still the name brands that are driving store traffic. What shoppers are going home with is a different story.

“National brands bring people into the store, but they have a thinner margin for the retailer,” he said. “With the store brand, the retailer has a huge margin. So retailers want to sell more store brands, but they can’t give up on national brands because they generate traffic.”  

Because of this, Shin believes national brands will always exist—to what extent remains to be seen. He predicts that soon, U.S. store shelves will look more like the shelves of European countries like Switzerland, Spain and England, with 40 percent of products being store brand.   

In other words, if you live and die for Sargento cheese and Oreo cookies, don’t worry—they won’t be going anywhere. Even Shin, despite his research on store brands, admits to having his own brand name bias, especially when it comes to his kids’ snacks. “On the one hand, I know the quality differentiation is probably small,” he said, but on the other hand, the store brand just “didn’t seem as tasty.”

Aditi Shrikant

Aditi Shrikant is a Brooklyn-based writer whose goals are to eliminate mansplainers along with the top sheet. You can follow her on Twitter @Aditi_Shrikant and Instagram @aditishrikant.