Inflation is high, economic growth is stagnant, food prices soar: it was the 1970s, and everyone needed to eat to live, but no one had money. So some aggressive grocery stores have an idea - they start buying their own food directly from manufacturers, putting it in an exaggerated wool-free package and selling it for something far below the name brand. These products are called "generic drugs" and if the problem is insufficient, the solution is.
OK, a little bit. Peas are starchy and corn is very bland. Generics are not bad, but they are not very good either. "They are basically fewer versions of products people want to buy," Gavan Fitzsimons, a professor of marketing and psychology at Duke University, told me. Before Fitzsimons was a consumer psychologist, a high school stake clerk at a local grocery store, he remembers the "terrible" stuff from many store brands. It goes into the bottom shelf, and retailers and consumers know it is a inferior product. Greg Sleter, executive editor of Trade Publications, said: "There are Store Brandtell me: "Nothing sexy about it." People hate generic drugs so much that the name itself becomes a mild insult, synonymous with anything without primitive or inspiration.
Fifty years later, inflation was high, economic growth stagnated, food prices soared, Americans turned to store-branded merchandise again: sales rose 3.9% in 2024, and in that year, sales rose 5%. But this time, people actually want to buy these things. A survey shows that in 2023 and 2024, more than half of shoppers made decisions about where to shop brands shop, while in 2016 it was the third. If the product at a grocery store was once inconspicuous, bad, bad, inferior, then what you buy is because it's cheap and available because it's cheap, and over the past decade or so, it's become a paintbrush. They really, really taste much better than ever.
The new art term for a store or home brand is Private tagsit comes with indicators of all exclusivity and exquisite surface level, which means to indicate: chic packaging, strong brand name, unique and limited edition flavors, even if the quality is variable. Now walk into the target, Wegman or Whole Foods, while home-branded pasta, canned beans and salad dressings are likely to be on the middle shelf, at the eye level, where the grocery store puts what they want you to see. These products are sometimes exactly the same as those found in national brands, i.e. in different packaging, grocery independent terms such as name brands such as Coca-Cola and Lysol (e.g. Coca-Cola and Lysol). Sometimes, they are such a small tweak. But these products are increasingly conceived by the grocery company itself and then formulated in partnership with manufacturers, with a higher quality than they were a decade or two years ago. At this point, from a taste point of view and a brand point of view, “It’s hard for a lot of people to tell what it is actually a private label brand, what a national brand is,” Jeff Wells Grocery diving,tell me.
Grocery stores have a huge incentive to invest in their own private label merchandise. These items have higher profit margins because they are sold directly to consumers and they provide bargaining power for merchandise grocery stores on the market, as stores now do not rely too much on a single middleman supplier to store shelves. Private label merchandise is also free marketing, and it’s a chance for grocery stores to have their brand in front of people – “It’s like the name of a restaurant,” Grocery Store: U.S. Food Buying and Selling,tell me. In short, they are a lot for grocers. That's why Joe Coulombe (who you probably know him better about him as Trader Joe) demands to go all out with his own type of grocery brand products that are cheaper than national brands but have less personality than regular brands.
Coulombe took some time to figure this out, but when it works, it does work. Trader Joe's is one of the greatest success stories in American grocery stores – a business school case study and ecstasy (and honestly, sometimes confusing) consumer behavior. As Benjamin Lorr in The Secret Life of Grocery. Ten or 20 years ago, a large grocery chain might have brought consultants to help develop its home brand. Now that the store has an internal department dedicated to the work, Wells told me: “They are hiring packaging designers and brand marketers and people working for brands in some cases for those countries.”
To a large extent, since grocery stores sell a lot of items under one roof, it makes the house brand prosper to a large extent, so basically understands how you eat, and where you shop, how often you shop, what you buy, what you buy in some cases No purchase. On the other hand, big well-packed brands have much more limited data: they rely primarily on what grocery stores tell them themselves, and what they can collect from consumer data like Nielsen. For example, my local Whole Foods knew yesterday, I bought a bag of Fusillotti, a large chunk of Parm and two lemons at 6:11 pm. Fusilotti Maker only knows that it sells a certain amount of pasta every month.
So using these data, grocery stores are developing more and more products with new and unique flavors that align with larger food trends: Kroger’s spicy dill spicy potato chips at Kroger, Target’s “Cookie & Crème” Granola. Wells told me: “They are on the verge of bleeding in the flavor trend, and “the past was once a private label was a step or two after. "Grocery stores are also creating brands to sell these increasingly more products to a constantly segmented consumer base - now the store may have only one dedicated brand, only for plant-based foods, wines, millennials, or for identifying home cooks. Everyone can get a considerable name like simple truth and kindness. Target alone has 59 different home brands, including nine different wine labels. Last year, Walmart launched a "culinary first" grocery brand, whatever that means.
When powerful data and complex R&D collide with novel culture, you get something new. For example, until recently, if you want canned whipped cream, you might have purchased Reddi-Wip. Founded in 1948, the company is known for its flavor: Ordinary. Target now sells “cream cream toppings” in a variety of seasonal flavors under its favorite Day House brand, including now, including lavender lemonade, peach and cream, and a cold foam of sweet cream. People are very enthusiastic about this. When the Instagram account @snackolator posted information about Target's New Year's flavors, more than 35,000 users smashed the Like button. A can of favorite day dairy toppings cost $3.59, less than Reddi-Wip’s cans of cream than Reddi-wip, but no less expensive than Reddi-Wip in some other stores. "Some of these price points are spreading towards the same national brands," Slater told me.
As a result, private labels may lose what makes them attractive in the first place: cheap, simple basics, or what Wharton store marketing professor America Reed II calls the appeal to “effective Misers.” He told me: "People watch these private label brands grow and then more and more, and then they offer less utility." At some point, a beautifully packaged, less cute private label starts to look like any other brand (the secret of using big data and expensive marketing, endless, endless, endless engineering), and then you might as well buy a national brand. When it's a brand, a brand, a brand, they've always started to feel simple and universal: nothing special for them.
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