Store Brands Help Keep the Lid on National Brand Prices

June 1, 2010
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A new study by the W.P. Carey School of Business at Arizona State University (ASU) finds store brands save shoppers money - even those who don't buy them!

"When grocery stores offer these competitive store brand products," said lead researcher Timothy Richards, Ph.D., ASU professor, "it forces the brand name companies to lower the wholesale prices they charge the grocery stores. Part of the savings is then passed on to the customers who buy the brand names."

Slated for publication in an upcoming issue of the Journal of Agricultural and Resource Economics, the study focuses on private label ice cream, but Richards said the findings translate to other store brand products as well, including cereal, dairy products, condiments, soda and other items.

The research also found that private labels are becoming an important way for supermarket and other retailers to differentiate themselves from the crowd. In fact, Richards called Safeway a good example of a chain that's done an excellent job creating and promoting "destination" store brand products.

"Many stores also offer good, better and best labels, like a super-premium brand, to help cater to a wider variety of consumers," Richards said. "And all store brands offer the grocery chain a higher profit margin than the brand name products."

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