This intriguing report on Private Brands comes from Medill Reports – Medill Reports is written and produced by graduate journalism students at Northwestern University’s Medill school. Each day, students uncover, report, write, file and produce news stories for both Web and print for use by various media outlets in Chicago and the surrounding suburbs. This story by graduate student Alice Truong presents an insightful look at the growth of Private Brand.
by Alice Truong
Alicia Peiffer used to go to the store and pick up packs of Huggies diapers for her two children. But things changed when her fiance lost one of his jobs in January. On a routine shopping trip, she noticed the Target-brand diapers—Up & Up—on sale.
“I thought, ‘Oh I’ll try it,'” the Orland Park mother said, and learned she could barely tell the difference, except for the price—$13 for the Target brand versus $19 for Huggies. “Obviously, the baby doesn’t have a clue.”
Used to be there was a certain stigma attached to picking up the store-brand product versus purchasing national-brand products, but that has faded along with sky-high housing prices. Instead, the shift in consumer mindset has helped generics gain market share and propped up retailers’ margins.
Generic brands currently make up $88 billion in sales, according to the Private Label Manufacturers Association. While stores are capitalizing on the generic-buying trend by investing more in marketing their private-label lines, many are asking if this is a trend that will continue.
“Longer term, private labels are here to stay,” said Michelle Chang, an analyst at Morningstar Inc. who follows Supervalu Inc., Kroger Co. and Safeway Inc.—companies with portfolios boosted by their private-label lines.
Meanwhile Timothy Calkins, a professor at Northwestern University’s Kellogg School of Management, whose specialty lies in marketing and branding, said the recession has only sped up a trend that has been developing for years.