Store Brands are a type of Private Label, and as the name suggests — they are brands owned and named after a store. For example — Walgreens has a wide range of store brands, which includes body washes, shaving accessories and other such things that have the Walgreens name on it.
Store Brands are cheaper than competing National Brands and offer competitive quality at a reasonable price. For example, a Walgreen Body Wash costs about $2.99, which competes with the Old Spice brand that costs $4.99.
Store Brands have been growing in popularity for a long time now and most major retailers have a range of products under their brands.
In fact, Walgreens stated that its private label sales shot up by 15% in Q4 2008, which goes to show the growing popularity of store brands. Of course, in the case of Walgreens — their store brands are decked up in between the National brands and look quite similar to them. The first time I bought a Walgreens store brand — I didn’t even realize what it was. But, later, I didn’t notice any difference in quality, so I didn’t mind using it.
One of the reasons that store brands are cheaper is that retailers usually don’t advertise their products that much and save that cost.
Retailers love store brands because it gives them a lot of control over inventory. A store owner in Goa once explained to me, that they don’t have a lot of flexibility in terms of pricing the products of national brands. National brands lay down certain price limits (high and low) and retailers have to stick to that. National brands do this so that consumers get a fairly uniform price for their products, regardless of the store they buy from.
So, if there is some inventory that is not getting sold — the retailers don’t always have an option of getting rid of their inventory at fire — sale prices. The national brands don’t allow them to sell below a certain price and in many cases they are stuck with lavender shirts with white stripes.
If you stock up your own brand, then this limitation doesn’t exist. So, when you recognize that there is no market for lavender shirts with white stripes — you can sell it off for an 80% discount and at least get rid of your inventory.
This helps ease cash flow and enable them to manage their working capital better.
From the customer’s perspective — if you are not fiercely loyal to a particular shampoo or body wash — you should give the store brand a try and see if it helps ease a little burden on your wallet.
What you say is correct! When I do my grocery shopping @ Kroger’s or if I pop into CVS, I notice that their in-house brands are cheaper by 50 cents or so and these stores also have ‘bundling’ offers on these! This makes is a lot cheaper as compared to other well known brands.
And along with using the CVS card or Kroger card, one can avail of a lot many of these discounts.
But I guess this approach of in-house brands will not work all that much for something like toothpaste? Coz there are a lot of people I know (including me) who are fiercely loyal to a particular brand.