As budgets tighten, store brands shine

Lynne Warren pulls a pizza from an oven in the deli section of a Kroger store in Cincinnati. As food gets more expensive, American shoppers are increasingly switching to store brands.

CINCINNATI — After watching the price of her favorite bread rise too quickly, Michele Shores decided it was time for a fresh approach.

She began buying store-brand breads, Kroger Co.'s brand or Wal-Mart Stores Inc.'s Great Value, when her usual bread went from $2 to $3 a loaf. The store brands cost less than half the price, and were not half bad.

"My husband takes his lunch to work and we all eat a lot of sandwiches here," said the 30-year-old mother of two from Atlanta. "So that's a lot of money for us."

As budgets get tighter and food gets more expensive, American shoppers increasingly are switching to store brands, even upper-income consumers who may not have been inclined to try them before.

The nation's biggest grocery sellers, Wal-Mart, Kroger, Supervalu Inc. and Safeway Inc., all report that sales of their own brands are jumping as customers need to reduce spending.

The Food Marketing Institute, an industry group, found this year that the number of shoppers who say they are buying more store brand items has been rising steadily and is up to some 60 percent. Candace Corlett, president of consulting firm WSL Strategic Retail, said her group has found that even upper-income shoppers are more willing to buy store brands, which traditionally were seen as appealing to people on limited budgets.

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The stores have been pushing their own brands in areas such as dairy, meats and breads for which prices have risen especially fast, and also are tapping into increased demand for organics and natural foods.

Burt P. Flickinger III, managing director of Strategic Research Group, said the U.S. chains are catching up to the tradition of strong private-brand programs in other countries, such as those of London-based Tesco PLC and Canada's Loblaw Co. Ltd., which 30 years ago introduced a brand called simply "No Name."