I was shopping in my grocery store recently when I realized how the store’s own branded items have almost completely taken over certain sections. Sections like chips, frozen vegetables, canned vegetables, bread, tortillas, ice cream, paper towels, baggies, and many more are dominated by the the store’s own branded products. The regular brands are relegated to a small area not in the prime locations. For example, in the tortilla section the center 3 shelves have the store brand and the top and bottom shelves are crammed with the other brands.
Many of the store-branded items are better than the regular items. There will often be more variety of product and the quality can be just as good. I’ve made a point of buying the regular items to ensure competition, but I wonder about the future. Will the store of the future carry primarily their own brands? Do you see the same thing in your store?
A lot of ‘brand-name’ products are hardly worth the premium they command. You can buy pasta sauce for $2 a bottle, and I bet the $10 stuff is not *that *much better. Large companies love spending money on advertising and convincing you that their product stands out from the rest, but the truth is that most household products today are excellent, and close to the same quality.
With grocery stores, every item on a shelf is displacing some other item, so the answer to the question is invariably “Yes.”
However, in my neighborhood grocery chains (Albertsons, Safeway, QFC), the name brand items are still placed front and center where you see them first. The store brands are numerous and easy to find, but they’re not getting the best shelf real estate
Unless the OP is in Canada, probably not, as I don’t think Loblaw has much of (if any) presence in the U.S. – although they used to distribute President’s Choice as a private-label line to several U.S. grocery chains (Jewel in Chicago, for example, carried President’s Choice in the 1990s).
In the U.S., several big grocery operators, particularly Safeway, also have a huge emphasis on their private label products. They’re big enough companies that they’re manufacturing the stuff themselves in many cases, and it’s a way to make operating a grocery chain more profitable – historically, the profit margins in the grocery retailing industry have always been razor-thin.
Grocery stores do not manufacture their own private label products. Most of the branded manufacturers produce private label products for the grocery store companies. In some cases it is the same product as the branded product with a different label on it. Sometimes, it may have some variation, to the branded product. Typically the grocer may make a higher margin % but less in $ on private label product, so there is still an incentive for the grocer to sell the branded products.
An example of one section they have taken over is regular frozen vegetables . There are 4 columns of their store-branded product and one column for regular brands. But the regular brands are all specialty products like steamer bags and such. If you just want a bag of something like frozen broccoli, you can only get the store brand.
If you shop at Trader Joes you’ll see almost all of their products are private-label. They do carry some name-brand products and have an enormous wine section where their “two buck chuck” only uses a tiny area. People love them and they are generally reasonably priced.
Our main store doesn’t carry the name brand lemon juice anymore at all, just the store brand. And Mrs. FtG hates it. You can easily tell it’s a cheap knockoff and not as good as the name brand.
One interesting case of who-makes-what is the Chex cereal brand. Ralston Purina sold the cereal brand but not the factories. So they continue to make the original Chex cereals which are sold as store brands. The cereals with the Chex label are essentially the knockoffs.
Manhattan real estate is not as valuable and fought over as a foot of grocery store shelf space. It’s truly unreal how the food conglomerates view that space: not just a tug-of-war, but real war and every foot of shelf with someone else’s product is the enemy. They’re not interested in a majority position, they want it all, and view it as rightfully theirs… so any tactic at all they can get away with to get another foot and/or drive a competitor off the shelf is a good on.
I would not be surprised if the expansion in store brands is a muscle tactic to get the conglomerates to up their bids for shelf space, subsidies, markdowns etc. There are many reasons why store brands are not likely to be more profitable for stores.
I worked for Safeway for many years and the vendors would show up about 430 in the morning to restock their stuff. It was pretty funny to watch them do their thing: if there was empty space on the shelf anywhere in the general vicinity of their allotted space, they stuffed a few extra bags of Doritos in there, or shoved stuff over to get an extra row, or pushed adjacent items back and put their stuff in front. When I became the overnight manager/receiver I would give them shit if I caught them, but they still managed to cheat to get as much product on the shelf as possible. I couldn’t watch 20 different vendors in 20 different aisles at once.
The biggest chains, such as Safeway, actually do operate their own manufacturing facilities for certain categories, particularly dairy products, bakery products, produce, and soft drinks. In Safeway’s 2012 annual report, they indicate that they operate 20 manufacturing and processing facilities in the U.S., and another 12 in Canada.
But, yes, for more traditional packaged goods, they are contracting from either (a) manufacturers of branded products, or (b) companies which specialize in private-label manufacturing.