Own Label vs Brand – A Different Perspective

Store brand, own label, private label, generic – historically, the concepts have not carried a positive connotation among the consumer base compared to brand names, with the possible exceptions of luxury supermarket brand ranges, which are effectively a brand name in their own right.  Up until the current recession, own label products have not accounted for a very large percentage of sales, and were regarded as the lesser (and therefore cheaper) choice.

The difficult economic times have changed the sales figures – tightening purse strings tends to cause the public to compromise, and so the cheaper products have begun to find their way into the shopping baskets.

But, aside from being less expensive to the consumer, and perhaps having a slightly different formulation (to avoid intellectual property lawsuits) from brand names, what is it that makes up an own label product for a multiple retailer?  Why is it cheaper?  Is the quality compromised?  And, aside from price and packaging colours, is there any real difference?

I by no means have the answers to the economic varieties of questions regarding this.  I know little of how the contract structure is set up, and what negotiations take place in the baroque behind-the-scenes arena of price negotiations.  What I do know, is a very interesting, and rather important datum regarding the technical regulations guarding brand and own label products, and the differences between those.

The major difference is this – while brand names have their brand loyalty to build on, and must deliver on the brand standard, brand-name manufacturers are often large international conglomerates, and are governed only by the overhead applicable law of the land (EU food laws, in the case of Europe, or the FDA regulations in the case of the States, for example).  On the other hand, own label products can’t, by default, be marketed with a brand name (since the only brand they carry is that of the retailer itself), so they must build customer loyalty by offering something better – and since better standards of quality and cleaner labels have become the consumer favourites lately, they have also become a necessity in the cut-throat competitive world of multiple retailers.

Therefore, in addition to the law of the land, the retailers institute their own codes of practice for their brands: quality standards which they then can and do advertise to the consumer.  For example: in 2007, ASDA’s no-nasties guarantee has scored it press coverage and heightened consumer respect for the retailer, it being the first to tighten its codes of practice and make it public.  Since then all the major multiples have followed suit by instituting lists of banned additives, narrowing the list of what could be used in own-label products significantly from the EU legally permitted additive list.

Furthermore, as suppliers to the multiple retailers are dependent on every contract for their livelihood, and wish to remain so (compared to large brand names that the retailers wish to list due to consumer preference), they (own label suppliers) tend to allow audits of their sites and rigorous inspections of quality of production of items to be supplied under the retailer own label brand, which is not necessarily as easy in terms of the larger brand-name conglomerates.

I do not say that, being less legally bound and less given to inspections, all brand name products are therefore necessarily produced to a worse standard than own label.  That is not nearly the case.  The question regarding what is in every particular product is still answered on the back of pack panel, and those who care about such things, should make their decisions on the basis of that.  What I am trying to say, is that store own label products are not normally inferior (and quite often are superior, especially in case of top ranges) to the brand name ones, and are, in fact, governed by an extra set of external codes of practice and control over production which the brand name products are not.

So next time, before you automatically reach for the branded product, assuming the higher price tag and flashier packaging imply a better quality guarantee, do turn it over and compare the back to the own label item sitting next to it on the shelf.  Clear your head of advertisement bull-manure, remind yourself that the pretty packaging is likely to end up in the garbage anyhow, take note of what is (and is not) on the list of ingredients of both of those boxes – and then make up your own mind – it’s what your head is there for.

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