Research: Store Brands Promote Competition

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June 1, 2010

Store brands not only save shoppers money, they promote overall competition in the marketplace, according to research conducted by a group of Arizona State University professors.

The research shows that even if a store brand isn’t a top seller, it promotes lower pries in the category overall, according to Professor Timothy Richards, the Marvin and June Morrison Chair of Agribusiness and Resource Management at the W. P. Carey School of Business.

“Consumers benefit because the whole idea is for retailers to provide a value option to customers,” Richards said in a statement. “Also, when grocery stores offer these competitive store-brand products, it forces the brand-name companies to lower the wholesale prices they charge the grocery stores. Part of the savings is then passed on to the customers who buy the brand names.”

Richards and several colleagues conducted the research, which is published in the Journal of Agriculture and Resource Economics.

The research also found that store brand sales improve the more similar a store brand product is to the national brand offering and the closer they are merchandised with each other on the shelf. The research also revealed store brands create retailer niches and differentiation.

Read These Related Articles:

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• Store Brands Tally Historic Market Share Gains
• Consumers See Little Quality Difference Between Store Brands and National Brands
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• Store Brands Market Share Gains Level, But Likely to Hold

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