Store Brands Aren't Doing Half as Well as They Could

Shopper Report, The,  Sept, 2000  

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Over the course of this summer, The Consumer Network conducted a store brand/national brand dialog with 1000 members of our shopper panel. The dialog covered perceptions of store brands in general and store versus national brands of food, household, drug, beverage, and personal care products. The dialog produced a book full of perceptions and feelings and lots and lots of numbers. We learned that "store brands and national brands are beginning to blur into each other" and that many consumers "are more open to trying them". We confirmed that good packaging and good press in print media have reshaped the brand parity perceptions of many consumers. And we gained some insights about where the opportunities lie and where retailers-have dropped the ball while national brands were giving them room to grow.

The mini-tables shown below are abbreviations of tables incorporated in a forthcoming report entitled Store Brands At The Turning Point. The abbreviations omit the demographics and the scant disagreement with the basic idea of quality parity. Only eight percent of our panelists disagreed with the parity idea at any level! For a great majority of American consumers right now, many or most store brand products are expected to be about the same quality as national brand products, most of the time. This perception raises lots of basic questions, the first and foremost of which is "If the price is lower and the quality is the same, why aren't more consumers buying more store brands on more shopping trips?"

The traditional reason for the power of brands in the United States is that they typically designate good and reliable products supported by long term, high quality advertising. One consumer told us that years of national brand buying and advertising "has made me and most people I know pretty national product warped."

But that's hardly the whole story. Our dialog this summer suggests several additional reasons for the hold of national brands and the slow growth of store brands:

1. Branded products are less time consuming to buy than store brands which vary in quality and value from category to category within a store as well as between stores. For many shoppers, each store brand purchase requires a decision based on memory or recommendation about the parity of this particular product.

2. Stores don't position and support their store brands in a way that connects with consumers. They don't share the kind of information with their shoppers that they would share with business partners, e.g., they don't tell their shoppers who their suppliers are and don't tell when they've switched suppliers on any given item so that the shopper might know if the item might taste or perform somewhat differently. Most stores make good on store brand returns but few if any make their store brand a component of their basic customer relationships. They don't position their store brand as a key reason to shop their stores, and, not surprisingly, few consumers make their store choice decisions based on their like/dislike of specific store brand products.

* "Store brand differences make no difference to me in where I shop. Inferior store brand products don't necessarily reflect on the store, only on sourcing for the store brand item."

* "I hate Safeway but I do use a few of their store brands. I do most of my shopping at Albertson's but don't buy a lot of their store brands."

3. Store brands are less consistent than national brands, in part because stores switch suppliers without informing their shoppers. This is another piece of the positioning shortfall noted in "2" above.

4. Brands have more credibility than stores. Consumers catch even their favorite stores distorting the truth and misleading them more often than they catch brands distorting truth and misleading them. "You have to watch prices at the supermarket. Many stores are deceptive in their pricing." And by a 2:1 margin, they still feel as though they are frequently overcharged at checkout. (Twice as many respondents disagreed as agreed that supermarkets are doing a better job of price accuracy at the register.)

5. Very few shoppers connect store brand purchases with supporting their favorite stores. In response to our direct question, many told us they'd never thought of it and some that chains like Kroger or Publix "hardly need my support." Stores haven't asked for this kind of support directly -- and few have asked even indirectly -- such as by offering incentives to increase the number of store brand products that customers try.

6. Store brand merchandising is erratic and forces shoppers to work out each product deal for themselves. Store brand merchandising and advertising often exaggerate the savings available through the store brand. They position their store brands as a block, and fail to share relevant information with their shoppers. They don't acknowledge that some of their store brand products are the best deals for shoppers at the same time that national brands products are the best deals on other products.