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The rise of store brands
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mindwaves
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Jan 19, 2017, 02:59 AM
 
Once upon a time, it would be unthought of to buy store brands. Always buy name brands was the calling of most people in the middle class. Buy name brand infant formula (Abbott or Nestle or Mead Johnson), diapers (Pampers), batteries (Duracell), and spices (McCormick).

But now, I see the huge rise in store brands and stores promoting their own products inside the store, so much so that the store products are given prime placement inside the stores by being placed in the end caps of the aisles. They are sometimes packaged very similar to the name products by featuring similar colors, similar fonts, and similar pictures. Kind of deceiving, if you ask me.

So instead of buying Abbott infant milk (Similac), you can buy Sams club Member's Mark instead. Instead of buying Duracell batteries, you buy Amazon Basic batteries instead.

I think that this will eventually kill the big brands or at least change their strategy completely. Amazon will introduce their own line of clothing and sports apparel, so I hear, so they will even compete with Nike and Under Amour. I think, in this regards, it is good. Name brand sports apparel is crazy expensive and has huge margins. Amazon wants in on this. Thoughts?
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P
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Jan 19, 2017, 07:27 AM
 
I sometimes listen to the Exponent podcast. It is a podcast about the tech sector from the perspective of two economists. I find it very interesting, even if it takes a bit of effort to keep focused on it when there are so many funny or simpler podcasts out there.

One of the points that is frequently brought up is this idea that advertising is supposed to pay for everything, and the economics just don't bear this out - the amount of money spent on advertising as a percentage of GDP is roughly constant, if averaged out over a cycle (ie, advertsing drops quickly when the economy goes into a recession, but also rises very fast when the economy starts expanding again, so it is a bit of a leading indicator). If there are more advertising spots available, the buyers will spend the same amount of money to get more spots. This means that if every little app online wants to live on advertising, their revenue comes from ad revenue that used to go to newspapers and TV.

This is where I get back on your topic. One of the hosts there presents a very compelling case that big consumer brands like those owned by P&G live in symbiosis with live TV. Their business model is based on the idea that the consumers keep being inundated with ads telling them how great that specific brand of condiment or diapers or whatever is, which is one part of how they stay dominant. The other, of course, is the war for shelf space - to simply make enough products that you crowd out all the competitors - which is irrelevant when competing against a store brand.

Now that ad-supported TV watching is in freefall (it is, look at some Nielsen ratings over a long time), it follows that sales for those big brands would eventually be dropping as well. What you're saying is that they are, effectively supporting that theory. Interesting. If the P&Gs of this world realize that TV advertising is no longer working, they will stop doing it and start flooding your Facebook feed instead - and that is the time when ad-supported TV will truly die.
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Doc HM
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Jan 19, 2017, 08:40 AM
 
Originally Posted by P View Post
and that is the time when ad-supported TV will truly die.
Poor ad supported TV is also squeezed by the rise and rise of streaming. Netflix/Amazon subscribers pay their fee and get everything ad free. And more services are coming on line all the time as the big broadcasters switch, Sky, Virgin etc have interests in subscription. The amount of original programming is exploding.
Eventually ad supported TV will vanish. How much space the streaming world offers is debatable. The quality is hard to find at the moment, with films too. I hope that access to streaming platforms will allow for an explosion in more niche content rather than expanded dross.

Where does this leave the big brands. Sponsorship? Product placement? Both are small beer compared to ad spend. I guess social will take up the slack making facebook etc a thoroughly unpleasant space for a while.
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P
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Jan 19, 2017, 09:56 AM
 
Originally Posted by Doc HM View Post
Poor ad supported TV is also squeezed by the rise and rise of streaming. Netflix/Amazon subscribers pay their fee and get everything ad free. And more services are coming on line all the time as the big broadcasters switch, Sky, Virgin etc have interests in subscription. The amount of original programming is exploding.
This is what is pushing TV viewership down - along with the web itself - but TV ads are still expensive, because those big buyers still notice an effect of the buy. This anecdote implies that the effect is fading, which is when ad rates will plummet.
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andi*pandi
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Jan 19, 2017, 10:07 AM
 

When I was a kid buying store brand meant buying the white label black print GENERIC package, which was embarrassing to have on display at home it was so cheap and ugly looking. The lack of branding/marketing in the package implied you'd just be paying for the product, not marketing; however it also implied the product wasn't as good. In reality most of the products are probably produced in the same factory and different labels slapped on.

Nowadays, store brands have upped the marketing and for most items I prefer the store brand. There are some instances however where the store brand hasn't managed to copy the formula exactly, so I still prefer Skippy peanut butter, Colgate toothpaste. Coupon clipping for name brands is also less of a priority, since usually the store brand is better than the coupon anyhow.

(wonder what ads we'll get on this thread, I look forward to peanut butter ads instead of dubious virus cleaners)
     
Thorzdad
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Jan 19, 2017, 10:44 AM
 
We do our weekly grocery shopping at a regional big-box, and the growing proliferation of their house-brand is pretty spectacular. In general, I've learned to avoid the house brand when it comes to certain categories. We use a lot of canned, whole tomatoes, for instance, and the house brand is definitely inferior in quality, as are many of the other canned products.

I'm always perplexed, though, at the already-dirt-cheap products that someone in corporate decided needed a store-brand version. Especially when the resulting store brand is a mere 3-5ยข less than the national brand.
     
osiris
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Jan 19, 2017, 12:10 PM
 
At one time generic brands were pretty bad, things have changed, Lately, though, I've been, uh, I've been buying the generic brand of waxed beans. you know. I rip off the label. I can hardly tell the difference.
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subego
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Jan 19, 2017, 12:34 PM
 
Originally Posted by andi*pandi View Post

When I was a kid buying store brand meant buying the white label black print GENERIC package, which was embarrassing to have on display at home it was so cheap and ugly looking. The lack of branding/marketing in the package implied you'd just be paying for the product, not marketing; however it also implied the product wasn't as good. In reality most of the products are probably produced in the same factory and different labels slapped on.
Back in the day, Jewel's generic brands went for the "government surplus" aesthetic.

     
OAW
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Jan 19, 2017, 01:31 PM
 
In most instances if you actually compare the ingredients between a name brand and a store brand the lists are identical. So why pay more for the same thing?

OAW
     
subego
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Jan 19, 2017, 01:45 PM
 
I've been impressed with 7-11 house brand "cool ranch Doritos", and their various gummy products.
     
mindwaves  (op)
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Jan 19, 2017, 05:49 PM
 
Do the store brands and the name brands get their food from the same source? For example, Similac's infant formula and Sam's Club Member's Mark may have similar ingredients.

I would think that Sam's Club would be unwilling to spend perhaps millions in developing their own infant formula including research, development, and testing.
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P
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Jan 19, 2017, 06:10 PM
 
Don't know about food. For diapers I happen to know how it works - they're made in the same plant, but the store brand diapers use less superabsorbent (which does what you think it does).
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subego
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Jan 19, 2017, 06:35 PM
 
Last time I checked, CVS gummy products are made by Haribo. I'm not sure if they change the formulation. Haribo is trash anyway.
     
osiris
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Jan 20, 2017, 10:32 AM
 
Duane Reade's own brand of paper towels is on par with Bounty, but at $4 for a six pack of select a size vs $3 a roll of Bounty.
I just hate getting screwed over for stuff, especially things you literally just throw away.
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mindwaves  (op)
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Jan 25, 2017, 12:17 PM
 
Very interesting to know about the diapers. The generics always claim that they use the same ingredients or the same active ingredients are the name brands, but I guess that the percentage of ingredients may be different to account for at least a partial difference in price disparity.
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osiris
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Jan 25, 2017, 03:23 PM
 
Originally Posted by subego View Post
Back in the day, Jewel's generic brands went for the "government surplus" aesthetic.

It just occurred to me that canned coffee was once sold in pound and 2 pound cans, I think it's down to 13 oz or so, not sure what the larger one is.
Like pound cake no longer being a pound - Entenmens once had a 16oz pound cake but had to change the name when they reduced it to much less than a pound. Don't know if generics have done this as well as a cost cutting measure.
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starman
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Jan 25, 2017, 09:51 PM
 

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