When name-brands go head-to-head with un-brands

At first, one might suspect that I’m actually writing about a retail or CPG trend, here. But the fact is, this retail trend is simply a response to emerging consumer preferences, in many ways.

This week, a story from CNN/Money explained how many consumer packaged goods companies are losing their shelf space in major retail stores. Read the story to grasp the full explanation of causes and effects, but much of this change can be attributed to the trend that consumers are favoring store brands, in their ongoing quest to extract more value from each dollar. Further, the store brand is often a more profitable product for the retailer to sell. Having done the math, retailers are open to dropping certain “brand” lines, in favor of private-label goods that are both more popular among consumers and profitable for the store.

Implications: Once upon a time, money was no object… and people would by the famous name brand simply because it was the famous name brand. “It was for your family, and you didn’t want to cut corners when it comes to that!” Back then, store brands (often thought of as “generics”) were the preference of only the most frugal shoppers.

During the Great Recession, however, the consumer discovered that store-brands were often as good or better than the brand product… or any difference went un-detected when presented to their family at the dinner table. Store brands became acceptable… and the post-recession consumer has shown no “hurry” about going back to brands now that the recovery is said to be underway. Further evidence of that is found in this recent Marketing Daily story, which indicates that private label goods are out-pacing "name brands" in terms of growth.

Other changes made by the consumer seem to be sticking-around for the post-recession economy. In a Wall Street Journal story this week, the CEO of Heinz suggested that coupon clipping is back to stay. And a story from the most recent Brandweek explains that at a conference in Florida this week, executives from companies like General Mills, ConAgra, Unilever and others seemed to be in agreement that “value” was the prevailing mood for consumers.

In my opinion, all of this does NOT mean people won’t buy brands. It just means they won’t buy brands simply because they are brands. They want to know the value proposition behind any product which makes that item distinct and special in comparison to their other alternatives.

Alas, money is an object after all.

[Note: Special thanks to friend and fellow trendwatcher JoAnne Naganawa of Seattle for contributing to this story!]

Mike Anderson