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1 Easy Move Can Cut Your Grocery Bill -- but Some Shoppers Still Resist It

By Daniel B. Kline - Updated Apr 16, 2019 at 5:32PM

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Buying this type of item used to be a near guarantee of lower quality. That's no longer the case.

Generic products have come a long way. The days of intentionally bland packaging and questionable quality have long passed -- and even the descriptor "generic" has essentially been retired in favor of the more palatable idea of the "store brand."

And instead of offering lower-end knockoffs like "Loopy Fruits" or "Colonel Crunchy" cereals, store brands now commonly match the quality of the higher-cost brands. Some chains' house brands have almost reached the stature of national names themselves. 

The biggest difference, of course, is price -- sometimes, just a few cents per item in savings, but often more. However, with American families generally spending between 12.4% and 33% of their household income on groceries each month, according to the United States Department of Agriculture (USDA), even a small percentage in savings can add up.

The exterior of a Costco store.

Costco has the best mix of price and quality, according to a recent survey. Image source: Costco.

Which stores have the best generics?

If you're looking to shift some of your spending to the better generic options, U.S. consumers have some clear preferences, according to a survey conducted by Signs.com, an in-store signage and branding company. Respondents were asked to rank store-brand products for cost, quality, and in some cases, taste.

There was a clear winner: In the dependable store-brands category, products were judged on only two categories: price and quality. Costco (COST -0.54%) claimed the top spot overall by taking second place in both. Trader Joe's took first place in quality (but was only sixth in cost), while Walmart (WMT 0.32%) was first in price, but ninth when it came to quality.

The biggest challenge for the various retailers appears to be finding that sweet spot that allows them to balance low cost and good quality. Amazon's Whole Foods Market, for example, scored third place in quality but was the lowest rated (11th) when it came to price.

A chart shows which products are favored.

Image source: Signs.com.

Which products are the favorites?

Consumers, as the chart above shows, are highly variable about their willingness to go with store brands, depending on what product category is under consideration. When it comes to over-the-counter medications, for example, respondents generally opted for the generics, including Walmart's Equate and Great Value brands, CVS Health, and Well at Walgreens.

"Except for milk and bottled water (both Great Value), people preferred the brand-name product as their first choice on coffee, ice cream, peanut butter, and cheese," according to the Signs.com report. "Coffee and dish soap were the only two products where participants didn't vote a single generic brand into their top three selections."

Basically, when it comes to food and beverages, consumers tend to favor the familiar. And that makes sense. The difference between a store-brand paper towel and its name-brand counterpart may not be particularly noticeable, while even small differences in the recipes for, say, ice cream or peanut butter can alter their tastes in obvious ways that shoppers may not be willing to accept just to save a few cents.

Be smart

Still, don't assume that store brands are inferior. In some cases -- medicine being a prime example -- they're essentially identical to their name-brand equivalents. When it comes to food, personal preferences come into play, but that doesn't mean you shouldn't sample the store brands to see if you like their variation equally well -- or better.

Your best course is to think of store brands as an opportunity. Take the cheaper option when it works for you, but don't give up your favorite coffee or ice cream for one you enjoy less. Smart substitutions will help you bring your grocery bill down without sacrificing on taste or quality.

Check out the latest Walmart and Costco earnings call transcripts.

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