Buying Generic Doesn't Save Shoppers As Much As It Used To

Used to be, back in the days of yore, shoppers looking for a deal in the grocery store could go for a generic store brand item instead of the more expensive name brands. But lately the gap between those two options has been narrowing, to the point where store brands sometimes even cost more than their previously pricier counterparts.

Many consumers turned to the tactic of store brands during the recession, to the point that now, a lot of us actually prefer our generic items for the basics at the grocery store and have become loyal to those brands instead.

According to the Wall Street Journal (via Time), stores have caught on and are raising the prices of their private-label goods, to the tune of 5.3% on nonperishables and a whopping 12% for perishables. Name brand prices aren’t rising at the same pace, at only 1.9% and 8% on those respective categories, but still cost on average about 29% more than generic brands.

“It’s much less about value and price than it used to be,” says Clarkston Consulting analyst Steve Rosenstock, who conducted a two-month study last fall across major grocery and drugstore chains to examine why shoppers buy store brands. He says 28% of his survey respondents didn’t cite price as a factor in choosing store brands over name brands–loyalty and positive experiences, instead, drove their purchasing decisions.

Stores have caught on and updated their boring, bland brand labels and created more exciting, attractive packaging for their products. And they’re not afraid to price those items above their name brand counterparts. For example, Target’s Archer Farms line of snacks and drinks are easily recognizable and loved by customers for their pretty logos and familiar branding.

To fight back, name brands are offering more coupons, deals and discounts to woo customers back to the fold, as well as trying to bring the cost of their products down.

Who knows, if store brand prices keep rising and name brands continue to lower theirs in response, we could see a complete switcheroo, with generics on top and name brands signaling cost-efficient options.

Store Brands Step Up Their Game, and Prices [Wall Street Journal]

Why We’re Now Paying More For Generic Groceries []

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.