Buying private-label brands can be a good way to save a few bucks. In the United States, Costco and Walmart house brands offer similar quality to national brands but for far less—25 percent off or more. In 2020, private-label goods generated more than $158 billion of sales, about a fifth of the US packaged goods sector.
The category expanded during the pandemic, likely because in tough economic times, more consumers tend to buy private-label goods, according to University of Southern California’s Shantanu Dutta, New York University’s Divya Singhvi, and USC’s Somya Singhvi.
But greater demand can drive up private-label prices faster than national-brand prices, reducing the key benefit of affordability. When the Great Recession started in 2007, for instance, house-brand prices rose 31 percent more than national brands, the researchers find.
“Given the signiﬁcant number of sales to lower-income households, ensuring availability of private-label brands at affordable prices becomes particularly important,” they write, observing that the price surge of discount brands only adds to economic insecurity.
What can policy makers do? To address the question and track sales and prices as the Great Recession unfolded, Dutta, Singhvi, and Singhvi analyzed NielsenIQ Consumer Panel Data, housed at Chicago Booth’s Kilts Center for Marketing, on 33 million purchases by more than 91,000 households between 2006 and 2009. The categories of goods included health and beauty, dry grocery, frozen food, dairy, deli, meat, fresh produce, nonfood items, alcoholic beverages, and general merchandise.