WASHINGTON — A new report from the U.S. Department of Agriculture's Economic Research Service finds that most supermarkets offer private-label discounts in direct response to national-brand discounts, but that the extent of these price cuts varies widely across store locations and departments.
The report found a 23% price gap between private-label and national-brand products, both with and without price promotions. This percentage, which was calculated using price data from two grocery chains between 2008 and 2010, is lower than previous measurements, indicating that the overall quality of private-label products is approaching or equal to that of national brands.
"Retailers are increasingly using [private labels] as a means to differentiate themselves from competitors," the report stated.
Price promotions differ according to department, with grocery products seeing the most private-label /national-brand promotional interplay while meat, seafood and produce saw the least. Proximity to supercenter competitors, meanwhile, affected the deployment of price discounts overall, with supermarkets in direct competition with supercenters opting to adopt a broad everyday-low-price plan as opposed to individual promotions.
The report indicates that the popularity of private label increased greatly during the recession, with private-label discounts increasing while national-brand prices remained relatively stable.