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As the Recession Weakens, Consumers Will Stick with Private-Label Products, Researcher Predicts

• Switched store formats (type of stores) from grocery to clubs, such as Costco or Sam's, or discount stores, such as Dollar General.

These habits continue to be reflected among the general population as the United States moves out of the recession, said Molly Jensen, assistant professor of marketing in the Sam M. Walton College of Business at the University of Arkansas.

"Of course, not all economists agree that we're pulling out of the recession," Jensen said. "Some think we're still skimming along the bottom. Regardless, shopping habits have changed, and consumers will likely continue to remain thriftier than in past years."

Jensen says American consumers generally have not held private labels in high regard, especially compared to European consumers. Private labels are typically referred to as "store brands," meaning a brand that can be found only within a chain, such as Sam's Choice and Great Value at Walmart and Archer Farms at Target. Generic brands differ in that they are funneled through a warehouse distributer to a variety of stores. Until recently there was only about 40-percent household penetration of private labels, meaning that on any given day, one would find private-label products in only 4 out of 10 households.

Recently, however, projections are up to 60-percent penetration of private-label products into American homes. Jensen speculates that when consumers are able to go back to branded products, they will have found that many of the private-label products were of equal or higher quality.

"A simple perusal of grocery aisles in any store will confirm an increase in private-label variety," she says. "Stores are introducing a variety of new categories with private-label products, including organic eggs, gourmet crackers, single-serving powdered drinks and household cleaners."

Source: NewsWise