Why does every major grocery chain have their brand next to the national brands? Are the factories making these the same but putting a different label on it? Or does Target and Kroger have factories that produce all the products? Where do these store brands come from?
In: Economics
Oftentimes yes. A national chain might contract an established manufacturer to produce their “house” brand product at a lower cost in exchange for a large order volume.
This chain can then sell that product at their stores for a lower cost and the manufacturer benefits from selling product to the chain. Many manufacturers are in this kind of business, and the chain’s house brand might be functionally identical to that manufacturer’s own brand, just with a lower cost and different packaging.
The downside to this (sometimes) is that the manufacturer is producing products that directly compete with their own brands at a lower price point.
This can negatively impact the manufacturer as their profit margins decrease and they become increasingly dependent on those high volume/low profit orders to keep their lights on.
Source: Worked for a large [redacted] company whose products you definitely have in your home/work that also produces a lot of house brands for national chains.
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