Store Brands Thrive in Recession

(MoneyWatch)  As in all recessions, there has been a spike in sales of private-label, or store-brand, grocery items. And as long as the products maintain their quality, the trend should translate into higher sales even when the economy improves.

Private-label products increased to a record $80 billion in the year ended in September, up from $73 billion in the previous year, according to the Private Label Manufacturers Association.

That group's president, Brian Sharoff, said during a trade show in Chicago this week that store brands showed increases of between 9 and 14 percent in the last two recessions. "In both of those economic downturns, consumers tried store brands, liked them and stayed with them after the economy improved," he said. He didn't, however, say how many consumers stuck with the store brands, but it's a good bet that more of them did so than did in the '70s and '80s, when sub-par "generic" products, with their stenciled black-and-white labels, were the ultimate inferior good, regularly mocked by Johnny Carson.

They're a lot better now. Kroger reports that store brands make up more than a quarter of sales. The chain has nearly doubled the number of private-label products it sells since 2003, to more than 14,400. Others, including Safeway and Albertson's, are also doing well with them.

"Generics have virtually disappeared from stores and now quality, assortment and innovation are driving the success of private label," Sharoff said in a statement released by the PLMA. "The state of the economy can create an historic expansion of retailers' store brands, but only if the industry remains committed to offering consumers the best store brands possible."