When you go down almost any grocery aisle, you're likely to be confronted with a choice in most product categories. There will be an advertised brand you've heard of, and right next to it a brand you haven't.
Is one better than the other?
There probably isn't a lot of difference between the two products. In fact, both products may have come out of the same food manufacturing plant.
For example, ConAgra spends millions of dollars to promote its Peter Pan peanut butter. But it also produces Great Value peanut butter, Wal-Mart's store brand. While there might be slight differences in the two products, the differences are likely to be subtle.
Store brands usually cost less than name brands for one simple reason; a manufacturer spends lots of money advertising its name brand product and that cost gets passed along to the consumer. A store brand doesn't carry that marketing cost and further benefits from the chain store's massive distribution power. The store can sell it for less and still make money.
Chalk it up to the power of advertising that U.S. consumers have traditionally favored nationally advertised brands. At least they did until the Great Recession, when value conscious shoppers decided to try more and more store brand products.
The Food Marketing Institute's 2009 U.S. Grocery Shopper Trends report shows consumers have switched to "private label," or store brand products, and have also begun buying fewer processed food products.
Not only can some consumers not tell the difference between a store brand and a nationally advertised brand, sometimes they might even prefer it. In 2005 a double-blind nationwide taste by Meyers Research found that participants preferred the taste of private-label products over advertised brands by a margin of 51 percent to 49 percent. A Consumer Reports taste test in 2009 achieved similar results.
Now that consumers have found they can also save money on these brands, some experts don't expect a return to better known advertised brands once the economy improves.
"Shopping habits have changed, and consumers will likely continue to remain thriftier than in past years," said Molly Jensen, assistant professor of marketing in the Sam M. Walton College of Business at the University of Arkansas.
That prediction is backed up by a 2009 study by GfK Roper, that found 91 percent of shoppers who say they switched from buying name brands to buying store brands during the previous year will continue buying the store brand after the recession ends. Based on a poll of 800 grocery shoppers, the survey cited quality as a major factor in influencing their purchase decisions.
Jensen says American consumers generally have not held private labels in high regard, especially compared with European consumers, who actually prefer them. Until recently there was only about 40-percent household penetration of private labels, meaning that on any given day, one would find private-label products in only 4 out of 10 households.
Recently, however, projections are up to 60-percent penetration of private-label products into American homes. Jensen speculates that when consumers are able to go back to branded products, they will have found that many of the private-label products were of equal or higher quality.
"A simple perusal of grocery aisles in any store will confirm an increase in private-label variety," she said. "Stores are introducing a variety of new categories with private-label products, including organic eggs, gourmet crackers, single-serving powdered drinks and household cleaners."