Anyone knows the reasons why supermarkets developing their house-brand products?

Question

I'd like to know your opinions.
-do you think by developing a wide range of products they can be cost-eficient and profitable?
-Do you think supermarkets' house-brand products which are usually cheaper can lead to a price-war with the other brands in the market?
-what about conflict of interest with other brand products which put their products on the shelves of those supermarkets?
-Do you think supermarkets which haven't developed their house-brand products should follow what their fellows have done in order to keep up with the competition?
All opinions are highly valued.

Answer 1

Answer to first/main question: To offer lower-priced alternatives and to make money.

As for whether by developing a wide range of products they can be cost-efficient and profitable, sure. Here's the deal, though: A lot of supermarket brands are actually produced by someone else, and the store-specific labels are put on the packages (or other store-specific packaging is used). So, you could buy a can of Kroger green beans in Texas and a can of Hy-Vee green beans in Illinois, and it's possible that they were prepared and packaged at the same place. Same goes for health and beauty products. There may be no difference at all between Safeway ibuprofen and Stop & Shop ibuprofen. Could be from the same manufacturing facility.

"Do you think supermarkets' house-brand products which are usually cheaper can lead to a price-war with the other brands in the market?" Can, but probably won't. There are three types of people: 1) People who will always buy national brands, no matter what. 2) People who will always buy economy brands, no matter what. 3) People who will buy only certain, specific economy-brand items (like toilet paper or pain reliever) but buy national-brand everything else. People don't tend to "overlap," comparing, say, Excedrin to store-brand pain reliever. Excedrin devotees will always buy Excedrin. Period. (Unless they totally crash in finances, but that's a whole other story.)

"What about conflict of interest with other brand products which put their products on the shelves of those supermarkets?" To this I give a similar answer--economy brands don't cut into national brands' profits as a rule, because people are either economy shoppers or label shoppers.

"Do you think supermarkets which haven't developed their house-brand products should follow what their fellows have done in order to keep up with the competition?" Not necessarily. So long as they have an economy brand alternative, they should be okay. I don't foresee anybody fighting over whether Kroger or Hy-Vee has the best green beans. Store brands just aren't in competition with each other. And nobody is going to get angry if a store offers one economy brand but not their own label. Lower prices are lower prices. Nobody cares about *which* economy brand they're going to buy, so long as there is one.

Answer 2

The housebrand products are usually made by a well known manufacturer but they sell it to the store under the store's name. It's not a conflict of interest with the other products - in some cases their competing against their own product. That's all I know about it.

Answer 3

It makes business sense, why sell other company's products when you can sell your own. Of course, not all house brand are good. Some are just as good as the brand name products, some are terrible. You are the consumer, you have the choice.

Answer 4

usually for the money.... name brand products have built repurtations for quality based on the brand, the supermarket chains want to keep more money in the store and with store brands that MUST have the same quality or better, more money can be cycled into the store after paying for restocking shelves, paying employees, etc....

Answer 5

They make a greater profit margin on store brands, even at a cheaper price. Also builds customer loyalty.

Answer 6

Price,
or taste.
It's your choice to make.
At least we have some choices to pick from.
For some items I like the cheaper house brand.
Then there are others that the brand name
really backs up what they say about it.

Answer 7

that is easy
they attempt to mrk it down like 15% and make a fortune on volume..
they also use the same manufacter as the competitor but use their own label I know this for a fact because this aslo goes for supplemnts you buy at the health food store as well

Answer 8

They do it to increase competition and of course for the profit.

Answer 9

cost is lower... vs the name brands... less marketing overhead?