Magazines Archives - 2009 March

Store brands gaining consumer favour in tough economic times
Story 2 - News Feature

HARDWARE, lumber and homecentre retailers in the US are finding the sales of their store-brand, or privatebrand, merchandise increasing these days because consumers are more aggressively accepting store-brand products in other retail channels.

Recent consumer research has disclosed that store-brand sales for food, drug and mass merchandise grew 10.8% in 2008, compared with only 2.69% in sales growth for national brands.

When consumers trust store brands for the food they eat, for over-the-counter medicines they take or for the clothes they wear, it is easy to believe that a store-brand hand tool, electrical fitting or lawn-care product in a hardware store or home centre will be met with little or no consumer resistance.

Private brands, which have been a basic marketing weapon among traditional retail/wholesale channels in the hardware/home-centre industry for many decades, have in recent years played an increasingly important role as giants like Home Depot, Lowes and Wal-Mart also began relying more heavily on such brands to generate higher margins and create loyal customers.

Ever since store programmes started in the US hardware industry nearly a century ago, private-brand products have been an integral part of such programmes. Store programmes help wholesalers and participating retailers create the impression of large chains to offset the price image of chain competition. Private brands also afford retailers an opportunity to make larger gross margins than many national-branded products.

However, many early attempts by wholesalers to develop store brands had lacked marketing impact — packaging was not as professionally designed or colour-coordinated across product lines; supporting advertising was limited and often not very effective; and, sometimes, product quality was not as good as it could — or should be — and consumers were not happy with their private-brand purchases.

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