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Store Brands -- Why?
Posted: 28 Mar 2006 21:57
I hope I'm not rehashing old topics, but I've been wondering lately why stores have store brands.
Is this some leftover vestage of the first days of groceteria (can I use that word?)? When stores were first started, was the store brand the *only* brand? Have store brands always focused on price?
Personally, I'm cheap....no, I'm "fiscally responsible." I'll give anything a try once. I do happen to know what percentage of sales for a major chain here in NC is from private label goods, and it wasn't too terribly surprising. And I have noticed that Publix doesn't have as many store brands as, say, Kroger or Food Lion.
So can anyone give a brief history of store brands?
Posted: 28 Mar 2006 22:07
Matt, I'm not the one to do a comprehensive history, but I had a weird experirence yesterday at my local Ukrop's. I've been buying the Ukrop's brand dry spaghetti. Now, for whatever reason (probably cost cutting), alot of the Ukrop's store brands are disappearing and are being replaced by Topco brands, like Food Club. So, instead of Ukrop's pasta, they now have Food Club pasta.
Now I know that the Ukrop's branded items have been mostly Topco items, and I know that the Ukrop's spaghetti is no doubt the same as Food Club spaghetti - but I just don't have the same feeling about the item and don't feel as comfortable buying it. Weird.
I guess the marketers got me.
Posted: 28 Mar 2006 22:44
It may go back to when the big chains started as tea merchants - A&P, Kroger, Jewel. Their original business was selling their own teas and spices.
On private brands, many of the store brands are made by the same companies that make the name brand products. Or by large mfg companies that specialize in store label goods such as Gilster-Mary Lee (baking mixes, foods) or Perrigo (largest maker of store brand OTC medicines.
Posted: 28 Mar 2006 22:54
The short answer is that store brands generally allow the retailer to sell the item at a lower cost AND a higher profit than the national brand. A&P was a big early adopter of store brands.
In the best cases, they also help promote loyalty to a certain chain. A&P's original store brands (Ann Page, Jane Parker, etc.) almost came to be viewed as national brands by some shoppers. In fact, one of them, Eight O'Clock Coffee, actually BECAME a national brand. I'm not sure what possessed them to give up all those individual brand names several years ago; they may have been some of the most valuable assets A&P owned at the time.
Winn-Dixie's store brands (Thrifty Maid, Astor, etc.) were always strong as well, which is why there was such an outcry a few years back when they contemplated eliminating most of them in favor of a single Winn-Dixie brand.
Posted: 28 Mar 2006 23:46
Another company that specializes in store brands is Ralcorp, which was the human food part of Ralston Purina that was spun off.
In the past the store brand has been considered a lower quality than the national brand, and that's certainly still the case with some products (generic ketchup? eww!) But lately the premium brands like Safeway Select and Private Selection have been innovative and have the same quality as the national brands. In fact, my new favorite pasta sauce is Safeway Select brand.
My partner works for a small company that makes a few products for a certain specialty grocer under that grocer's label. It turns out that the products are the same stuff that is sold under the company's label at other stores (at almost twice the price).
Posted: 29 Mar 2006 02:14
Well, you mustn't confuse "Store brand" products with "generic" products. I remember Vons selling an awful line of goods called "Slim Price" back in the 80's. We tried a few products of that line, and they were all just awful. These were sold in addition to the Vons store brand of products. The Vons brand stuff was pretty decent most of the time, as were the various Safeway store brands. (I remember Consumer Reports magazine rating "Par" laundry detergent a Best Buy in the late 1980's -- "Par" being a Safeway store brand at the time)
Posted: 29 Mar 2006 04:19
Winn Dixie DID eliminate Astor, Thrifty Maid, Superbrand and Crackin' Good in favor of their own Winn Dixie brand. I still don't understand the logic. The only brand still in existence is Chek, the soft drink brand.
Posted: 29 Mar 2006 14:24
It seemed like Safeway was the "king" of private store brands - Cragmont, Par, White Magic, Scotch Buy, Mrs. Whites, Crown Colony, Lucerne, Busy Baker..etc
Posted: 29 Mar 2006 19:29
Not to mention for Safeway: Scotch Buy, Nu Made, Party Pride, Townhouse, Empress, Bel Air. Any others we are forgetting? I liked it better when they had the different brands. Now there is O, which eveeyone is getting confused with Oprah and O magazine.
Posted: 30 Mar 2006 05:26
Edwards coffee was also another Safeway brand. I said it before, but I'd like the "Select" line a lot better if it had the red stripe with "Finest Quality" on the bottom of the packaging!!!
Posted: 01 Apr 2006 15:16
Daniel wrote:Well, you mustn't confuse "Store brand" products with "generic" products. I remember Vons selling an awful line of goods called "Slim Price" back in the 80's. (I remember Consumer Reports magazine rating "Par" laundry detergent a Best Buy in the late 1980's -- "Par" being a Safeway store brand at the time)
In another thread, I mentioned both the Slim Price and Par names... Safeway has a budget line of paper towels called Slim Price -- I wonder if they picked up the rights to the name through Vons. Par laundry detergent is still around, by the way... I had never seen it before, and though it was a new house brand, so maybe Safeway had reintroduced it.
At the beginning of this thread, Matt said that he knows what percentage of sales store brands make up for a certain chain. I'm curious as to what that percentage is. You don't have to tell us who the chain is if it's proprietary knowledge, of course.
Posted: 01 Apr 2006 19:00
tkaye wrote:In another thread, I mentioned both the Slim Price and Par names... Safeway has a budget line of paper towels called Slim Price -- I wonder if they picked up the rights to the name through Vons.
It's the exact same label as the old Vons Slim Price, so I'm sure it was picked up in the Vons acquisition.
The only Slim Price item I've seen is those paper towels. The first time I saw it on the shelf a few months ago it was a total flashback. I don't think Vons had used the Slim Price label in probably 15 years.
Posted: 01 Apr 2006 21:43
"Slim Price" sounds like the name of a singing cowboy...
Posted: 02 Apr 2006 10:53
Not really history but maybe some insight into why retailers push store brands:
At Sav-on 1990's, especially in new markets like the Northern California combo stores, our goal was to have Sav-on brand aspirin and hydrogen peroxide in every medicine cabinet. The thought was that when they ran out of one, they would say to themselves "time to go to Sav-on". We sold these 2 items in particular very cheap (in-store specials).
Private label products, especially in drug and general merchandise, have very high profit margins, some as high as 90%.
Posted: 02 Apr 2006 21:05
Daniel wrote:At the beginning of this thread, Matt said that he knows what percentage of sales store brands make up for a certain chain. I'm curious as to what that percentage is. You don't have to tell us who the chain is if it's proprietary knowledge, of course.
Okay...I just checked the 10-K (SEC filing) for Delhaize, and found it in there, so it's public knowledge:
"Sales of private label products represented 17%, 18%, 15%, 14% and 11% of Food Lion’s, Hannaford’s, Kash n’ Karry’s, Sweetbay’s and Harveys’ respective sales in 2005."
Just wanted to make sure I could divulge and keep my job (yes, even as much as I complain about it).
I know I mentioned above that these figures weren't too surprising to me, but now I'm going back and forth. I wonder what the figures are for other chains...maybe if I feel industrious I'll sift through the SEC filings for other companies.
Or, if someone else would: [url]http:\\edgar.sec.gov[/url], then click on "search for company filings." 10-K is the annual report. Hmm...or conceivably, one could go to the respective companies' websites.
Anyhoo...thanks for the discussion, guys!