More Good Reasons to Go Generic in the Grocery Store

Generics are economical, and many compare favorably with national brands. Yet they continue to be controversial, and they can divide thrifty shoppers like Republicans and Democrats in a debt-ceiling debate.

Don’t believe us? Check out this post from Money Talks News founder Stacy Johnson: What’s in a (Brand) Name?

But the evidence keeps mounting that generics are a great deal. A recent study by the Private Label Manufacturers Association compared a summer shopping basket of store brands with the same basketful of national brands. The PLMA found that consumers can save more than 35 percent off their grocery bill, on average, by opting for the retailer’s brands. (Granted, the association that represents generic grocery producers may not be the most objective source, but still…)

Over the past decade, store brands have experienced unprecedented growth and consumer acceptance. According to PLMA statistics, they’ve gained 40 percent in supermarket sales alone. Those products now account for nearly one in four grocery products sold.

Generic groceries getting better – and getting respect

Lifelong grocer Joe Sorden knows that for a fact. The owner of Gene’s Market in Grant, Mich., is a big believer in store brands – although he wasn’t always.
“The quality of the product has come a long way in the last 10 years,” he said, pointing both to better flavor and the huge increase in the number of items available.

In addition to canned goods, there’s a plethora of store-brand dry goods, such as paper plates, napkins, even such items as kitty litter. Then there are store-brand frozen foods such as pizza, vegetables, and ice cream. And in the dairy case, milk, sour cream, eggs, cheese, even yogurt. Store-brand aspirin and acetaminophen, cough syrup, and antacids fill the health and beauty aids aisle.

All told, Sorden says the number of store-brand products in his store has probably tripled in the last five to 10 years.

Phil Deering agrees. Like Sorden, Deering has spent his entire life in the grocery industry, working in the store his father opened in Empire, Mich., under the Deering’s Market name. What’s more, relatives throughout northern Michigan operate other grocery stores, from small meat markets to the regional chain of Tom’s Markets.

He’s careful to point to the difference between store brands – in his case, like Sorden’s, Spartan (the nation’s 11th-largest grocery distributors, headquartered in Grand Rapids) – and what he calls generics or black-and-whites.

“With store brands, like Kroger, A&P, Spartan, Meijer, those corporations realized they have a market, and they can make money,” Deering says. “What they’ve done is guaranteed good quality.”

On the other hand, that opened up a market for the generics – the non-brand-name, or store-name products often seen in dollar stores or such operations as Sav-A-Lot stores, as well as grocery stores. Deering says these generics are usually made by small companies that purchase extra or leftover products from various producers, and they’re able to offer them at a much lower price, although without the expectations of consistent high quality.

The savings can add up

Of course, the lower price is what draws customers. Sorden says the savings from buying store brands can range from a few cents on canned goods to as much as a couple of dollars on such pricey items as chips.

“It might be as little as a nickel or a dime, as manufacturers have gotten more competitive in their pricing,” he says. “But Spartan chips compared with Frito-Lay, it might be $1.99 to $3.99.”

And when the store brands go on sale, the savings are even bigger. Deering says Spartan sales will often offer the items at cost, just to get customers in the store where they’ll buy other items – and to convince potentially skeptical customers to give them a try.

Whatever the reason, that’s great news for a consumer base that’s still trying to decide whether we’re in the midst of or recovering from a recession. “People are tight with money right now,” Sorden says.

When to buy and when to walk on by

That store brands offer similar performance at a savings isn’t news. From water to margarine, there are a host of products where it’s difficult if not impossible to tell the difference between store and name brands.

Sorden himself is a believer in the store brands. While he still looks to the name brands for certain items – “I’ve gotta have my Jif peanut butter,” he says, along with Quaker Oats – for the most part he’s right there with his customers in buying store brands.

His suggestion if you’re unsure? Try the store brand. You may be surprised by how close it is to the name brand in quality, be it taste or performance. And if you find you prefer the name brand, you can always go back to it. The same is true of the generic, although as Deering points out, without the quality control, it may not be consistently the same.

“You might find you love it one time, then when you get it again, it’s not the same,” he warns.

Other generic outlets

Store brands exist in most retail outlets, large or small, whether it’s a grocery store, drug store, or department store. On a recent visit to Long Island, I was dumb enough to get sunburned. Shopping for relief at a CVS store brought me face-to-face with a name-brand lotion and a CVS lotion. Both had aloe, both promised relief, and both were 16 ounces. The difference? About $2.75.

Needless to say, the CVS brand found its way into my shopping bag, and darned if it didn’t do a fine job taking care of my sunburn pain.

Shoppers at department stores can find the same kind of savings in clothing. My closet is still home to several Field Gear shirts (from the late Marshall Fields), while Club Room (Macy’s), Croft & Barrow (Kohl’s), and St. John’s Bay (JCPenney) offer quality and variety at a lower price. Big-box electronics giant Best Buy sells its own Insignia brand, and after research by my detail-oriented son, we purchased an Insignia Blu-Ray player that offered the most features for the lowest price.

Why name brands cost more

National brands such as Del Monte or Green Giant have established their place in customers’ minds, not only through decades of familiarity on store shelves, but also through advertising. The fact that the Jolly Green Giant jingle still reverberates in people’s ears can’t be discounted. And the costs of continuing that market push year after year is reflected in the price of products.

“The advertising cost is a big part of their budget,” Deering says.

But he says that while the store brands have established their own practices, quality control, and even their own test kitchens, the industry is still led by the name brands.

“They do a lot of testing for new products,” he says. “They make investments in bringing products to market. Everybody else just copies them.”

Quality and atmosphere

While spending less has become even more important, cost savings isn’t the only item on the shopper’s list. A recent survey says when it comes to choosing a grocery store, shoppers say food quality and store atmosphere remain equally as important considerations as price.

“Shoppers are looking for more from their grocery store – if it doesn’t offer quality and a pleasant experience and value, then they’re out the door,” says Keith Jelinek, director in the Global Retail Practice at AlixPartners, which conducted the study. “It’s not enough for grocers to win on price alone.”

That’s not news to either Deering or Sorden, who have seen their business threatened by larger competitors. Deering is insulated to a degree by his operating in a small resort town, and both he and Sorden have decades of customer loyalty from their local bases.

But they realize that’s not enough. Sorden has responded by concentrating efforts on service and atmosphere, and reviews on such sites as Yelp bear witness to his success. Deering too concentrates on customer service, extending hours and even branching out into offering flowers and vegetables through the summer months.