No Contest Between Grocery Name Brands and Generics? Not Quite, Consumers Reveal

May 26, 2016

You’re strolling down the aisle of your go-to grocery store and stop at the packaged mac and cheese. Do you go with that ol’ faithful brand in the blue box? Or do you choose the no-name one with the weird, utilitarian lettering?

In a value-conscious world, it’s hard to justify purchases based on labels alone. But is this still true when it comes to grocery products? In other words, without the flashy or familiar packaging, does the mac and cheese taste the same?

Working with a grocery retailer who has their own store brand, we evaluated consumer perceptions around generic vs. branded products, and tested our hypotheses that 1) generics are usually considered of lesser quality, and 2) loyalty programs may entice consumers to purchase generics. The retailer hoped our findings would help inform their new development strategy to improve the image of their generic label and encourage consumers to buy it; further, they wanted to uncover some implications for the grocery retail industry as a whole.

The Research

We launched an Instant Research Group* of 37 respondents, male and female, ages 18-85. Each respondent had to be at least equally responsible for grocery shopping in his/her household, and be neutral or agreeable to the idea of purchasing generic brands. We also captured the primary grocery store in which each respondent shops.

Here are the key question and objectives that guided our qualitative research:

How do consumers view private label products as compared to branded products, and how can the perception be changed to increase sales of private label products?

Our objectives:

  • Understand how generic brands are perceived in terms of quality, value, purchase intent, packaging appeal, and brand equity as compared to traditionally branded products
  • Understand in which categories shoppers would or would not consider buying generic products
  • Identify what product innovations/attributes would make a consumer more likely to purchase generic products
  • Gauge consumers’ general opinions surrounding loyalty programs to determine if they would improve brand perception and increase the likelihood of purchasing a private label brand over a brand name product

The Results:

Consumers Want Value, but They Don’t Want to Feel Cheap

Overall, generic products are a smart alternative to branded products, our respondents told us, and while they feel the quality of generics may be similar or slightly lower, the better price of generics makes up the difference. Respondents are willing to try a variety of generic products and keep buying the ones they like. And they appreciate “upscale” generics that offer flavors or benefits that branded products do not.

“Through past experience I have found that typically store brands taste the same (and sometimes even better) as name brands and are much cheaper.” – 21, Female, Iowa, Walmart Supercenter

“I think Trader Joe’s brand is unique because they have almost exact product duplicates of some things, but also new innovative items.” – 31, Female, Missouri, Sam’s Club

Respondents rely on generics for pantry staples and everyday items (e.g., flour, sugar, pasta, ready-to-eat items like granola bars, disposable paper, or plastic items), but if they’re trying to make a good impression (such as during a party where labels will be on display), name brands win. And sometimes a name brand just can’t be adequately reproduced as a generic, in which case only the original will do (e.g., Oreo cookies, Heinz ketchup, Dr. Pepper).

“In some cases there truly is a reason (beyond branding) that the name brand is on top. Be it taste, ingredient quality, or otherwise, there are some examples where the generic brand can’t quite match up.” – 23, Male, Minnesota, Other Store

The obvious differentiator between generics and branded products is in the packaging. And it turns out that respondents actually appreciate the simplicity of generic labeling, as long as the design and/or logo is colorful, fresh, and doesn’t look boring or cheap. How else can a generic label stand out? With information. Respondents want to know about nutrition, ingredients, and how a generic compares to a specific name brand.

I like to see designs that are modern, elegant, professional, and clean. I don’t want something that looks dated and/or cheap.” – 31, Male, Kentucky, Kroger

“Sometimes, the plainer store brand package doesn’t stand out. For example, white, plainer brand labels say ‘basic.’ It doesn’t get me excited about purchasing something that is going to say ‘I bought the cheapest one.’” – 46, Female, California, Albertson’s

“I like when there is info on the package such as a guarantee or a description of the product. These little phrases make the generic sound as if they are as good as the name brand and makes me more likely to buy the generic.” – 55, Male, Illinois, Walmart Supercenter

Following one of our assumptions when we started the research, we found that a loyalty program is appealing if it’s as simple and hassle-free as possible. Most respondents like the idea of being rewarded for making smart choices with their money, and are amenable to rewards such as discounts, cash back, points toward future purchases, or free products.

“The less time [customers] have to spend handling points, cards, etc., the better. Make the rewards for it simple: cash back or a % discount on all generic products purchased. The more savings, the better.” – 23, Male, Minnesota, Other Store

“I would design the program to earn points for buying generics. You can then redeem those points toward other generic products. For example, spend $25 on generic products and receive 25 points. You can accumulate those points and redeem them for generic products on a future shopping trip.” – 33, Female, Wisconsin, Walmart Supercenter

How “Generic” Can Be a Viable Contender

Our respondents were pretty clear with us about what works and what doesn’t when it comes to generics, especially with packaging. For any grocery retailer looking to make their store brand stand out, bright colors and recognizable logos are the way to go. Add to that useful information so consumers are better able to compare against branded products.

There is also a real opportunity for store brands to carve out a niche for themselves among name brands by offering unique flavors, benefits, and special-diet options, similar to what Trader Joe’s private label, Archer Farms (by Target), and 365 Everyday Value (by Whole Foods) are doing.

And implementing a simple rewards program in which consumers see near-immediate incentive to purchasing store brands will help grocery retailers not only increase sales of their generics, but also build loyalty among their consumers, who are more likely to appreciate the value and quality in everything they’re purchasing from that grocery retailer.

Curious about the rest of the details? Download the full report to find out:

  • which store brands ranked high with our respondents,
  • how respondents rated the packaging of specific generic products, and
  • where respondents were split when it came to generic vs. name brand.

*An Instant Research Group is an online qualitative discussion where respondents interact with each other while answering open-ended questions and follow-ups posted by a trained moderator.

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