TREND TRUTH
Store Brands Gain Acceptance and Momentum with Today’s Consumer
As perceptions of quality improve and economic challenges persist, 25% of consumers plan to buy more store brands.
Popular association with poor quality and “looking cheap” have often kept store brands (private label products) from enjoying broad acceptance and sustained market share. There is even a lingering perception among some consumers that “store brands” equate to “generics,” an antiquated association to be sure. Yet store brands also have a universal reputation for saving consumers money. Data from a recent FGI study shows that 97% of US consumers believe “store brands cost less than national brands.”
Our findings suggest that consumers are poised to expand their purchases of store brands. Not only do a third of those surveyed buy more store brands than they did a year ago, but 1 in 4 plans to increase his or her store brand purchases in the future. As this CBS report reveals, even brand loyalists are open to switching to store brands, especially when the perceived quality is as good as, or better than, the national brand.
A Massive Market is at Stake
Of the $500 billion dollars that United States consumers spend yearly across all categories, store brands claim only 17% ($84 billion), but that share is growing –and national brands large and small have felt the shift. Store brand sales have even seen gains in categories that national manufacturers used to consider “safe,” like baby food, feminine hygiene, health and beauty products, household cleaning goods, and oral care, among others. The change is less surprising when you look at other markets around the world. In Western Europe, for instance, the market share of store brands is 2-3 times larger than that of national brands. As American consumers’ habits start to mirror this tendency, American companies are responding: Target plans to add another 100 products to their “UP & UP” brand in 2010.
Store Brand Quality Catches Up
FGI Research asked US consumers how they view the quality of store brands vs. name brands. Specifically, we asked how much they agreed with this statement: “The quality of store-brand products is just as good as name brand products.” A full two thirds (65%) of consumers said they “strongly agree” or “agreed somewhat.” Furthermore, four out of five (79%) consumers strongly agree or agree somewhat that “store-brand products are an excellent value for the money.”
“Store Brands are Just as High-Quality as Name Brands” 
These data suggest strong consumer confidence in store brands on questions of quality and value. On the whole, consumers view store-brand products as comparable in quality to name brands. Given the 97% who believe store brands are less expensive than name brands, and the more than 60% who believe store-brand products give them a good value for the price, it follows that switching from name brand to store brand may be one way consumers can save money without sacrificing quality. But how many will actually make the switch? FGI answered that question with some data about purchasing habits.
Store Brand Purchases Pick Up
Over a third (35%) of consumers said they were buying more store brands than a year ago. Asked to project their purchasing habits for the next year, 25% said they plan to increase their consumption of store brands. These results support industry predictions that store brand growth will be 13% annually. Should the US growth rate reach half of these levels, store brands could capture another $5 billion per year in consumer spending. This is a healthy “trial” statistic; retaining that share of wallet will ultimately depend on consistency of store brands’ competitive quality and pricing.
Grocery Store Brands Fare Best
FGI Research asked a few specific questions about store-brand food products (groceries). Up to 79% of consumers believed store-brand food products were “just as nutritious as name brands.” A larger percentage (83%) was willing to serve store-brand food products to family members. Meanwhile, 63% of consumers said they were “extremely likely” or “somewhat likely” to buy store-brand food products compared to national brands, while only 15% said they were “extremely unlikely” or “somewhat unlikely.”
“Thinking Only of Food Products, How Likely are You to Buy Store-Brand?” 
Store Brands Gain Traction Across Categories
Store brands consumers were most likely to buy included food, household goods, and “general merchandise” (a broad category that encompassed seasonal items, school supplies, automotive needs, etc). Hair care products, over-the-counter drugs and baby care also fared well. Consumers were less likely to spend on store-brand apparel and home goods like appliances.
“In which of the following categories do you purchase store-brand products?” 
Actionable Insights
This FGI Research study demonstrates growing consumer confidence in the quality, price and value of store-brand products, confidence which translates into higher consumption of store brands. Consumers are likelier to purchase store-brand food, household items, general merchandise, and health and beauty (less so home goods and apparel). So, what are some key actions to consider based on these findings?
- Retailers and manufacturers should continue to invest in store-brand offerings. These products usually bring higher margins for retailers and significant gains are possible with the proper research, product development and marketing.
- Some store brands’ packaging might need improvement. High quality, professional packaging and attractive pricing will drive sales.
- National brands must stay abreast of consumer preferences and behaviors, especially as regards leading store-brand offerings. Further erosion of their market share is likely without aggressive research, product development and real differentiation, and marketing.
- Private label manufacturers must remain aware of quality concerns to maintain their strong performance relative to national brands and even enhance their competitive edge. This means robust marketing and packaging research and conscientious response to consumer preferences.
Next Steps You Can Take
Survey Methods
Respondents: 367
Date of Survey: February 26th-28th, 2010
Sample Source: FGI SmartPanel
This nationally-representative sample consists of adults aged 18 and up and is balanced to the US population using recent census data. One can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.
April 17th, 2010 at 4:20 pm
i have always used store brands. in many cases they are just overruns of production of national brands with a different label. unless i have a real taste preference for a national brand, i would not consider getting one if a store brand was available.
April 17th, 2010 at 4:50 pm
Wow! What an eye opener! I didn’t know that you could save that much money! I can’t wait to tell my husband who always yells at me about the bills. I tell him to cheer up, even birds have bills!
April 17th, 2010 at 6:16 pm
wow, im impressed, i’ve made the study 2 days ago, but it seems you took material from previous surveys. So I am inclined to think that our last surveys are to compare with feb ones in order to develop a trend. Cool.
April 17th, 2010 at 6:31 pm
I think that it is a miracle that this topic has been discussed because many consumers think that name brands are superior to store brands, which in my opinion is a lie. The only real difference between store brands and name brands is the price. Store brands are a better value then name brands. Most consumer think that just because the store brand may have a lower price then its lower in quality also. But necessarily that isnt true… there is no real difference in taste nor quality so if you want a bigger pocket in stead of a bigger mortgage you should consider store brands.
April 18th, 2010 at 12:06 am
Not really that surprising! Store brands save money over their big-name equivalent. Big names do the advertising, and store brands get the sales. It’s really quite a broken system in that regard.
In fact, it’s to such a point where, outside of the grocery store (and sometimes not even that much!), I don’t even know if what I’m looking at _is_ actually a store brand! Wal-Mart, for example, I think has Durabrand, and I totally forgot who has Insignia… I only know they’re store brands after a little bit of research. I wouldn’t have guessed, looking at the product or packaging, that this DVD player is really a “Wal-Mart brand DVD player”.
While store brand food items are usually of a similar quality to the national brands, electronics and other items typically just don’t even compare to their big-name equivalents. Store brands typically exist at a quality and price rung just below the lowest “national brand” product. They often seem to be cheaply-manufactured “get it out the door with 5 seconds of QA” products where the cost to run proper QA exceeds the cost of the product. They’re the poster child of “get what you pay for”, most of the time. There are a few gems out there but for the most part, store brand electronics still have a bad rap, I think…
But I’m perfectly fine buying store brand food :)
April 18th, 2010 at 11:02 pm
Some store brands ae just as good as name brands it jsut depends on the product. I buy them no problem , the cost is my main concern. But usually if I havdea coujpon I will buy name brand cause it will end up cheaper.
April 19th, 2010 at 10:22 am
I fit into the group that have been using Store Breands for some time. Your survey results reflect
my views. These pretain to drug store ( Walgreens ) and grocery stores. On Home applainces I only purchase name brands. Apparel the same thing, although house brands at J C Penny I feel are outstanding quaitly at fair prices. Many grocery products are done by TOPCO and labeled for sellers.
these represent good valve and quailty