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
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.
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