Retailers revisit cheap brands

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Chicago, November 10: : Great Value is the largest brand at Wal-Mart, including 5,500 unique items.

"As our customers are looking to stretch their dollars as far as they can, private brands are becoming more and more important," Jack Sinclair, who oversees the grocery business for Wal-Mart's US division, said at the retailer's analyst meeting late last month.

Target is also increasing the focus on its own brands. At its analyst meeting last month, the discount retailer said total sales of Target brand commodities, such as paper towels and tape, have increased at an average of more than 15 per cent each year over the past five years.

"We believe there's an opportunity to go even further," said Kathee Tesija, Target's executive vice president of merchandising.

USING WHAT'S IN THE PANTRY

Kimberly-Clark, Procter & Gamble and others said consumers are using up what they have at home and buying smaller packages rather than stocking up on household goods. P&G said in late October that the shift in shopping patterns appears to be affecting volume in the current quarter.

P&G has held onto consumers with cheaper "Basic" versions of its Charmin toilet paper and Bounty towels, introduced in 2004. While it has Tide detergent and Pampers diapers at the top end, it also sells Gain and Luvs at lower prices.

"While private labels are clearly growing, in 19 or 20 of our top 24 categories they are not impacting us. We are either holding or growing," P&G Chairman and Chief Executive A.G. Lafley said during a conference call last month.

But shoppers have switched from its brands to private label in areas such as feminine care, pet care and batteries, where its Duracell brand lost US market share in the quarter.

Now, companies are responding with advertising and new products to pique consumers' interest.

"History would suggest the players that increase their share, or gain share, are those that advertise and innovate," said Ivan Hindshaw, managing partner at Bain & Co. in Los Angeles. "You have to be able to convince the consumer that you've got something unique and special that's worth paying for."

Clorox is responding to weaker sales of bleach with a new campaign that shows using bleach for more than just laundry, while P&G's value play includes advertisements that show its Gillette Fusion razors cost about $1 a week to use.