For most shoppers, store brands represent quality and performance as good as or better than national brands, while offering substantial savings at checkout. As a result, store brands have never been more popular. According to the most recent industry statistics, nearly one of every four products sold in the U.S. today is the retailer’s own brand.

In 2018, private label grew by 4.4%, four times as much as national brands, representing a gain of $5.5 billion. Store brands’ market penetration set all-time records, advancing to 18.5% in dollar share and 22.3% in unit share. Store brands accounted for $129 billion worth of retail sales across all major retail channels, as reported by Nielsen. It is estimated that an additional $40 billion in private label sales occurred in retailers not included in the Nielsen figure, which brings total private label sales to about $170 billion.

In a 2019 nationwide survey for PLMA, consumers gave store brands high marks. Two thirds of the respondents agreed with the statement that “In general, store brand products I have bought are just as good if not better than the national brand version of the same product.” More than four in ten said they buy store brands “always/frequently,” and one in four are buying more store brands now compared to five years ago. The same number declared they intend to buy more store brands in the year ahead. 

What Are Store Brands? Who Makes Them?

Simply stated, store brands are the products that carry the retailer's name or private brands. Surveys reveal that nearly every shopper buys store brands with some regularity. They are most likely in the refrigerator, pantry, or medicine cabinet; or in the home office, basement, shed or garage.

Sometimes, they carry the chain's own name, or a variety of brand names created exclusively by the retailer for its stores. In some cases, a store may belong to a wholesale buying group that owns labels that are available to the members of the group. These wholesaler-owned brands are referred to as controlled labels.

Store brand items are offered in just about every food and non-food grocery category: fresh, frozen and refrigerated food; canned and dry foods; snacks, pet foods, health and beauty care; over-the-counter drugs, cosmetics, household and laundry products; lawn and garden chemicals; paints, hardware, auto aftercare, stationery, and housewares; among other sections in the store.

Retail chains of all sizes develop and market store brands in various ways. They may create a whole line of products around a particular feature – such as Safeway's O Organics, Eating Right and Open Nature offerings; Kroger's Simple Truth, Comforts for Baby, and Private Selection; Albertsons' Essential Everyday and Wild Harvest brands, or Aldi's Simply Nature.

In other cases, a majority of the store brands offerings in a chain carry the same name – such as Costco's Kirkland Signature, Wal-Mart's Great Value, Whole Foods' 365 Everyday Value, or Meijer Gold. The chain's name can also serve as a store brand: Walgreens, CVS, Rite Aid, Family Dollar, DG, Wegmans, Giant Eagle, Publix, Raley's and Trader Joe's are a few examples.

Store Brands Are Everywhere

Store brands are available everywhere. When it comes to how the products can help meet their family's needs, consumers are turning to private label in a variety of retail chains besides their favorite food, drug and discount store.

Specialty chains – such as those selling home office products, hardware, domestic goods, consumer electronics, baby and child care, home improvement, do-it-yourself, pet care, toys, personal care and others – are bringing to market a variety of products that compete on equal terms with national brands. Some familiar store brands in these channels include eponymous lines from Staples, Ace and Petco; as well as unique brands from Home Depot (such as Husky, Hampton Bay, HDX) and Lowe's (Kobalt), among others.

Store brands are becoming prevalent in these specialty chains for the same reasons they have grown in supermarkets, drug stores and discount stores. They are available in familiar categories and offer the same advantages in performance and savings that consumers expect from store brands that meet their grocery needs. Many of these chains started out primarily as sellers of the big brands. But the increasing availability of high-quality store brands manufacturers enabled them to undertake a strategic expansion of their offerings.

The store brands advantage is not just available to consumers with cereal, orange juice and aspirin. They can buy store brand printing paper and writing instruments; tools and paint; and linens, towels and picture frames with the same confidence they are getting top quality and performance at significant savings when compared with national brands.

Where Do Store Brands Come From?

For many consumers, store brands have become an important ally in how they provide their families with high quality, everyday products at outstanding value. And store brands have also become important to retail chains, another reason they have grown so quickly. They give the chains a way to set themselves apart from the competition and enable them to offer their customers more choice. 

Historically, store brands signified good value for consumers while national brands were generally seen as the premium item in a category. That is no longer true. Many chains offer a range of products that are not solely focused on value. They offer premium products just like the national brands. As they become more than just a place to buy products, stores are involved in finding and developing items they can put their own name or brands on.

But where do store brands come from? For the products, chains turn to store brands manufacturers. When they do, they make it clear that high quality across the board – from ingredients to the supply chain, from the packaging and labeling to the final product itself – is the number one requirement.

Store brands manufacturers who meet those high standards come in all sizes and many are listed on major stock exchanges. There are thousands of companies in hundreds of categories that supply products in partnership with retailers.

Store brands manufacturers fall into several general classifications:

• Large national brand manufacturers that utilize their expertise and excess plant capacity to supply store brands.

• Small, high quality manufacturers that specialize in particular product lines and concentrate on producing store brands almost exclusively. Often these companies are owned by corporations that also produce national brands.

• Major retailers and wholesalers that run their own manufacturing facilities and provide store brands for themselves and, in a few cases, for other retail chains as well.

• Regional brand manufacturers that produce private label products for specific demographic markets.

• Large, nationwide manufacturers of store brands across a range of food and non-food product categories who supply a multiplicity of retail chains and channels in the U.S. and even internationally.

Store Brands Meet All Standards and Requirements

These companies make certain that their products meet the same exacting standards and requirements as major national brands. Just like national brands, store brands are tested and analyzed for quality and safety by independent companies before they reach store shelves.

Manufacturers also package and label the product to meet the stores' specifications. Each store has its own unique identity and the packaging reflects that. Developing good packaging was the first frontier in making store brands more successful. One of the reasons store brands have grown is the recognition of the importance of functional and attractive packaging. Not only how the package looks but also how it opens and closes; and sits on a shelf, pantry, tabletop or refrigerator.

While packaging is important as a first impression, ingredients and quality remain paramount. With most consumers believing store brands are as good as, or better than, national brands, the next step is to be more innovative. And innovative products can be found all over -- from fresh and frozen products in supermarkets to health and wellness diagnostic items in drug stores to household cleaning products in discount stores. Another area is the development of products targeted to different consumer interests, such as ethnic, gluten-free, low fat, reduced calories, diabetes care, international and U.S. regional cuisine, and "better for you" items. Organics, plant-based, vegan and natural are categories that are particularly active with such new products.

Because the store's name or symbol is on the package, the consumer is assured the product is manufactured to the highest quality standards and specifications. When it comes to food, retailers and their private label suppliers abide by the Nutrition Labeling and Education law that requires standard nutrition labeling; while content and health claims meet FDA regulations. Non-food items also conform to prevailing federal and industry standards and regulations.

Store Brands: The Smarter Choice

Store brands continue to represent significant savings for shoppers. In a broad comparison of item pricing based on average dollars per unit, it is estimated that consumers overall saved about $34 billion last year on grocery and household purchases by opting for the store brand over the national brand version of their favorite product.

Ongoing audits conducted on behalf of PLMA compare pricing at retail for store brands vs. national brands on 100 typical shopping cart items in selected markets around the country. These studies consistently reveal that shoppers save one-third or more on grocery and household items by selecting store brands over national brands.

One of the largest contributing factors to the pricing differential between store brands and national brands is marketing expense incurred by national brand makers, which is passed on to consumers and referred to by some analysts as the “marketing tax.” Many of the largest companies spend 20 to 30 cents or more of every dollar on trade promotion, advertising and shopper marketing in an effort to drive sales and maintain their position in consumers’ minds. The strategy also supports brand equity in the eyes of analysts and shareholders, who place a premium on their perception of a brand’s value in addition to the intrinsic value of the products themselves.

Habit and familiarity are reasons shoppers have traditionally been drawn to national brands. More and more of those formerly national brand-loyal consumers are reaching instead for store brands. In the process, they are building new habits and making new friends. With top quality, unique items and solid savings, store brands add up to a smarter choice for American consumers.

 

 

Return To: Previous Screen