Suspicious Shoppers Question Whether Store Brands Are Really Worth It

You go to your favorite grocery store, and the store’s own brands are crowding out the name brands you used to prefer. And some of those store brands are so cheap in comparison, they can’t possibly be any good, can they? Maybe you’re better off choosing the more expensive name brand – or shopping somewhere that isn’t pushing aside name brands for its own.

Sales of private label products have surged in recent years, as thrifty shoppers looked for more ways to save money and liked the store brands that they tried. But a combination of more financially-optimistic shoppers – and some retail marketing tactics like the ones above that may end up backfiring – could help explain why store brands’ surge appears to be leveling off.

NielsenIQ took a look at store- and national-brand product sales in its recent report, “Finding Harmony on the Shelf: 2025 Global Outlook on Private Label & Branded Products.” Over the past year, it found that private label sales reached new heights – but their rate of growth is slowing. When compared to the 4.8% increase in sales for the top ten global brands, private label product sales grew 4.3%.

Any growth is good, but the fact that private label sales growth is starting to fall behind national brand sales growth, means more shoppers who may have switched from national to store brands, could be switching back.

NIQ believes part of the reason is that “shoppers increasingly feel like they have weathered the worst of inflation,” and “more shoppers — especially younger ones — are more open to splurging.” That doesn’t necessarily mean they’re not concerned about their finances. But, having put off spending on big-ticket items, they may be more willing to splurge on more everyday purchases at the grocery store.

More than half of shoppers surveyed said they’re more likely these days to treat themselves by upgrading to a premium, name brand product. Nearly half of all shoppers agreed that name brands are “worth the extra price.”

That’s even though that extra price can be significant. NIQ found that, on average, branded products cost 26% more than their store-brand equivalents. Depending on the product, though, that price gap can be even greater. Brand-name pet food is an average of 88% higher in price, and some health and beauty products can be more than twice as expensive as store brands.

That might lead you to think that, in those cases, choosing store brands is a no-brainer. Instead, NIQ found, the opposite can happen. Such a huge price gap can raise shoppers’ suspicions, and make them question whether the store brands are cutting corners, using lesser ingredients or might even be unsafe.

One way some retailers have found to eliminate the price gap perception problem, is to eliminate the competition. As more store brands become available, many stores are devoting more shelf space to their own products and squeezing out some of the name brands they used to offer. Nearly half of the shoppers surveyed said they’ve noticed this, and that “some of their favorite name brands no longer seem to be available when they look for them.”

But this, too, could backfire if it causes shoppers to resent the lack of choice and switch to a store where they can find their favorite brands.

Of course, shoppers’ affinity for certain name brands, and a declining rate of growth for private label, doesn’t mean store brands are in trouble. “There are always going to be shoppers who simply shop for the most affordable product,” NIQ noted. In the U.S. alone, nearly three-quarters of survey respondents said store brands are good alternatives to name brands, and three-quarters agreed that they offer good value. Globally, more than half of shoppers say they’re buying more private label products than ever before, and they’d buy even more if a larger variety were available.

So NIQ advises retailers to keep working on their product selection, and name brand manufacturers should consider more promotions to narrow the price gap between their products and their store-brand rivals. “Retailers must continue to pump the pedals of innovation to maintain and exceed consumers’ expectations,” NIQ advised, while “manufacturers need to safeguard and expand their market share by innovating with trade incentives.”

Notably, 58% of shoppers told NIQ that brand is irrelevant to them, and they choose products based on what they need and what looks good. And those are the shoppers that brands and retailers are really competing for. Whether it’s with better store brands, less-expensive name brands, or name brands that are so good they’re worth paying for – the competition for your grocery dollars may be about to get even more intense.

Image source: ALDI