How is Great Value not destroying the market?



The ubiquity of their brand and how they’ve an alternative for every product is mind boggling. How this is not deemed destructive? It feels like a monopoly (though it’s technically not). Is this not eliminating entrepreneurial incentives since the biggest store in the world is filling its shelves with its own products?

In: Economics

There are lots of store brand goods that are cheaper than name brand versions.

However, they are not always great quality. Any drinker of diet coke will tell you they can taste the difference between real diet coke and store brand copies.

So the store brands make money from people who don’t notice or care about the difference, or perhaps even prefer store brand. Also from people who like the cheaper price. But there are still many people will to buy the more expensive version!

Great Value is not the only store brand that is way cheaper than name brand products. Costco is known to have a store brand Kirkland that is even cheaper for many products! But you are forced to buy in large quantities at Costco and pay a membership fee to shop there at all. There are many many store brands that can compete with each other from different stores. So the market has lots of competition even for cheap versions of products.

Answer: there are many people who will gladly accept reduced quality in order to save money. Now and then you will find a store brand that is just as good as the well-marketed product. In that case, buying the store brand makes good sense for anyone. Over-the-counter drugs are a good example of this. Ibuprofen is ibuprofen whether it is called Advil or something else.

But more often, the store brand is slightly inferior, and people choose to save money and accept the slight downgrade.

Just throwing this in here, too:

A lot of these products are made in the exact same factories. Maybe they change recipes, formulations, etc… Maybe they don’t. Either way, the business runs. The workers get paid. There is competition for “the name brand.” (Capitalism loves competition.) People are still gonna buy Campbell’s and Apple and General Mills, either for the perceived “quality” or name recognition.

Extra selection is almost never considered a “problem” to the “Free Market.”

Not every person shops at the biggest store in the world.
Not every person buys the store brand. I will buy store brand for a few things; but most definitely will not for some things.

Many large general stores have in-store brands like Great Value, Equate (Walmart), Up & Up (Target), Kirkland (Costco), no name (lots of Canadian grocery stores owned by Loblaw).

The parent big-box stores (Walmart, Target, etc) typically do not make any of these products, unlike the other brands which may or may not own their factories. These stores will go up to other companies’ factories (sometimes the same exact ones making the name brand products you know) and say, “hey, if we order a zillion of these, can you package them under this label?” The factory will oblige, because the big-box stores are promising a huge order up-front. They might even give the big-box stores a discount for this bulk order.

These generic brand products usually use lesser quality ingredients or parts, have less attention put in to product quality, and have less research put into making them taste good or last long or whatever. That reduces the price of their manufacture. The big-box stores also never have to market them, they just throw them out on the shelves and people will buy them. That’s even less cost in their production. All of these savings are passed onto the consumer as a product that costs less.

These products can coexist with name brand products because:

1. These products are usually inferior to the name brand products in some way, so people with the ability to pay for higher quality will keep buying those products
2. It opens the market to capture consumers who normally can’t afford the brand name products
3. The name brand products can point to the inferior products and say, “look at how much better we are than them” (“better than the leading brand”, etc) to improve their PR
4. the big name brands are probably getting paid anyway because they probably made those products too.