CHARLOTTE, N.C. -- Even as the economy shows signs of recovering, local retailers are expanding their selection of store brands and working to persuade more customers to try -- and stick with -- their products.
Store brands have been around for decades, offering goods similar to nationally recognized brands such as Heinz and Tide at lower prices. But they've come to make up a larger portion of retailers' sales as consumers traded down to save money -- often up to 30 percent, compared to national brands.
Retailers are ramping up private label offerings, trying to cement the recent gains and sell customers more of their goods -- such as Bi-Lo's "Southern Home" and Food Lion's "Home 360."
Food prices are expected to rise this year as a result of higher oil costs and poor harvests. The U.S. Department of Agriculture is forecasting that production of staple crops wheat and corn won't meet global demand.
Neil Stern, a senior partner and retail consultant at McMillan Doolittle in Chicago, said that store brands have usually become more popular during down times and have kept their appeal.
"We see these spikes up, and then as consumers have more money again, they tend to stick with their (new) habits," Stern said. He thinks the market share of private brands will continue increasing.
"Private labels 10 to 20 years ago certainly had a stigma of being lower priced, but lower quality," Stern said. But better packaging, ingredients and marketing have helped erase that stigma from many customers' minds.
Salisbury, N.C.,-based Food Lion this month announced a monthlong promotion to drive sales of its house brands, and Matthews, N.C.,-based Family Dollar said it's entering a long-term partnership to boost the assortment and quality of its private brands.
Both companies use Marketing Management Inc., a Fort Worth, Texas-based company that develops private brand products, labels and marketing strategies. MMI also sources the products' production through a network of manufacturers.
National brands still do a good job of differentiating themselves from the competition.
And even as some observers say brand loyalty is declining, Stern said no one should underestimate the power of habit and familiarity.
"If I'm a consumer and I know Tide cleans my clothing, I'll probably stick with Tide instead of paying a little less," he said. "I really want my deodorant to work. Am I willing to try something else and risk the personal embarrassment?"