Store Brands vs Name Brands

Why supermarkets sell their own brands, how they compare in quality and price, and how they affect competition with big manufacturers.

Most supermarkets sell their own brands alongside well-known names. These are called store brands or private labels. They are often cheaper and have grown to account for a large share of grocery sales in many countries.

Why supermarkets make them

Higher margins: supermarkets often earn a larger profit percentage on their own brands, even at lower prices, because they avoid paying for a manufacturer’s brand-building.
Customer loyalty: a store brand can only be bought in that chain.
Bargaining power: offering a credible alternative gives supermarkets leverage when negotiating prices with big manufacturers.

Who makes them

Store brands are often made by the same manufacturers that make branded products, or by specialist producers. Supermarkets set the specifications and packaging.

How they compare

Store brands are typically cheaper, sometimes by a large margin. Quality varies. For simple products like sugar, salt, flour and many medicines, store brands are often essentially identical to name brands. For others, taste tests find differences. Many supermarkets now offer tiers, from basic value ranges to premium store-brand lines that compete directly with top brands.

In Europe, discount chains such as Aldi and Lidl built their success largely on selling mostly their own brands at low prices.

The weekly shop

A family buys 40 items a week. Switching half of them to store brands that are 25 percent cheaper might cut the weekly bill significantly over a year, often without noticeable differences for staples like rice, pasta, cleaning products and tinned tomatoes. Trying store brands for basic items is one of the simplest ways to save on groceries.

Effects on competition

Store brands increase competition, pushing manufacturers to keep prices down and innovate. But they also give large supermarket chains more power over suppliers, which can squeeze smaller manufacturers.

Thinking store brands are always lower quality

For many basic products, store brands meet the same standards as name brands and may even come from the same factory. Price differences often reflect advertising and brand costs, not quality. Tasting or checking ingredients is the best test.

Key takeaways

Store brands are supermarkets' own products, usually cheaper than name brands.
They give supermarkets higher margins, customer loyalty and bargaining power.
For many staples, store brands are essentially identical to name brands.
They increase competition but give large retailers more power over suppliers.