In the cult classic flick Repo Man, all products were generic, with labels that read "BEER" or "FOOD." Funny, yeah, but when the movie came out in 1984, the ugly recession of the early '80s was fresh in people's minds, and stores really did carry cheap products with plain white labels and self-explanatory names. Since then, store-brand goods have increased in quality, removing much of their old stigma. Once viewed with derision, these low-priced, "private label" wares are now making a comeback on many grocers' shelves.
According to a Forbes article, Wal-Mart Stores
Whole Foods Market
Wal-Mart's expansion of its private-label offerings may create problems for rivals, but it probably won't affect shareholders one way or the other. The Bentonville behemoth already has a reputation for rock-bottom deals; Wal-Mart investors probably didn't need any further proof of that.
Instead, investors may want to consider how this trend might hurt providers of brand-name goods, including General Mills
I'll bet that shoppers embracing the "new frugality" may grow increasingly reluctant to pay more money simply for the sake of a popular brand name. As in the faltering luxury goods market, I suspect that purveyors of high-end or name brands will have to think long and hard about how to cope with this shift in public opinion. Shareholders should keep a close eye on how these companies meet their challenges -- or risk resigning themselves to years of decidedly bland, generic returns.
More on the changing face of retail:
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