The subject of today's post is "the invisible hand" that is helping retailers and is certainly being easier on consumers' wallets: generic brands. Like them, ignore them or hate them, but they have arrived. The other side of this door could be closing on the brand-name manufacturers/distributors.
According to Timothy Calkins, a professor at Northwestern University’s Kellogg School of Management, generic products have built momentum during the last several years and the current economic situation is actually helping them.
"In January 2008, the private-label market share was at 14.2 percent; two years later, it increased to 16 percent, according to a Credit Suisse report released March 4.
With more stores investing in their private labels, these generic products are slowly saturating retailers’ shelves.
“A lot of retailers are looking to optimize the shelf,” Calkins said, pointing to Wal-Mart’s decision last month to dump certain national brand products, such as Glad and Hefty food-storage bags, in favor of its Great Value private-label brand."via Northwestern University
P.S. If the current trends take significant hold and the economy does not generate enough jobs/confidence in the next decade, I think that there is a space for contemplating on relatively/marginally stronger retailers vis-a-vis brand-name manufacturers. And they will be fighting over a shrinking pie of consumer spending. Arguably, on a macro-level, this is a deflationary development. Note: Glad is owned by Clorox and P&G.
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