“Let’s just take the store brand,” I heard a wife tell her husband as they perused an aisle at a local supermarket. “It’s about a dollar cheaper” she continued, “and it’s just as good as the one we used to buy.” It should come as no surprise that a middle class family was willing to choose the private label (PL) product to save a dollar on one of the many items in their overflowing grocery cart. Families for whom groceries constitute a larger share of household expenditures are likely to be more price sensitive on average. What is intriguing, however, is that the store brand, which at one time was perceived as low quality, low price, is now being compared favorably with the name brand by consumers. Does this mean that the pricing landscape has changed for PL products? If so, what are some of the challenges that they face as they continue to grow and thrive in today’s economy? And how should name brand producers respond to such pressures? I spoke with Kim Frazier & Chris Goodin, from Deloitte Consulting LLP to get some insights on what has been a dramatic change in the PL industry and what pricing strategies are employed once launched at a retailer.
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