Price advantage of U.S. private labels compared with brands has fallen to around 30% from 50%; private-label prices could rise further to offset price of improvements, packaging, says expert

Cindy Allen

LOS ANGELES , March 7, 2012 (Industry Intelligence) – According to Sue Perry, the deputy editor at ShopSmart Magazine, the price advantage of private labels in comparison to brands has dwindled from up to 50% in the past to an average of roughly 30%, The Augusta Chronicle reported March 2.

Perry said that the price of private labels could rise ever further in an effort to offset the cost of improvements and packaging, and that customers could no longer simply assume that private label items would cost less than branded counterparts.

“That’s why you really have to be vigilant and do the unit pricing,” Perry said, “Do the comparison pricing and see if that store brand is really going to save you money. It used to be across the board that we could say safely that it did.”

Employees at Bi-Lo Inc. and Publix Super Markets Inc. indicated that neither chain is anticipating a price increase for private labels.

Brenda Reid, Publix’s media and community relations manager, added that the cost of packaging typically constitutes only a small percentage of the product’s total cost.

Reid added that, if market prices have increased, they were most likely driven by external conditions such as weather conditions or the price of fuel.

Although admitting that increases in the cost of fuel could potentially have a knock-down effect on the price of food, Glynn Jenkins, The Kroger Co.’s Atlanta division director of communications and public relations, said that it would be premature to speculate on potential increases in the cost of commodities.

The primary source of this article is The Augusta Chronicle, Augusta, Georgia, on March 2, 2012.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.