It’s definitely on purpose. These stores don’t want store brands to be in competition with national brands.
It all related to positioning.
However, research has shown that most profit is made when there are quality store brands, rather than low quality store brands. On the other hand, differentiation is the key; if you’re the only one with low cost store brands, you’ll win.
Refs for if you’re really interested:
Ailawadi, K.L. & Harlam, B. 2004. An Empirical Analysis of the Determinants of Retail Margins: The Role of Store-Brand Share. Journal of Marketing, 68 (1): 147 – 166
Ailawadi, K.L. 2001. The retail power-performance conundrum: What have we learned? Journal of Retailing, 77 (3): 299 – 319
Corstjens, M. & Lal, R. 2000. Building store loyalty through store brands. Journal of Marketing Research, 37 (3): 281 – 291
Cotterill, R.W., Putsis, W.P. & Dhar, R. 2000. Assessing the competitive interaction between private labels and national brands. Journal of Business, 73 (1): 109 – 138
Dick, A., Jain, A. & Richardson, P. 1995. Correlates of store brand proneness some empirical observations. Journal of Product and Brand Management, 4 (4): 15 – 22
Raju, J.S., Sethuraman, R. & Dhar, S.K. 1995b. The introduction and performance of store brands. Management Science, 41 (6): 957 – 979
Sayman, S., Hoch, S.J. & Raju, J. S. 2002. Positioning of store brands. Marketing Science, 21 (4): 378 – 397