7 ms·

I don't think anything good would be lost if store brands went away as an anti-monopoly measure. They're usually just rebranded from some other company anyways.

I don't think anything good would be lost if store brands went away as an anti-monopoly measure. They're usually just rebranded from some other company anyways. No need for the retail store to be double-dipping.

AdmiralAsshat 6y ago
You'd lose Costco's Kirkland brand, which is one of those rare instances of the store brand often being better than the name-brand.
- codegladiator 6y ago
  Why can't they still sell it at stores which they don't owe?
  - Miraste 6y ago
    Better to cancel the line than supply competitors with better cheaper products than your own store.
    - codegladiator 6y ago
      Sorry I don't get the point. Costco's competitors selling Costo's cheaper product would still harm costco ? Does costco get some extra benefit if the consumer buys Kirkland from costco ?
      - Miraste 6y ago
        > Does costco get some extra benefit if the consumer buys Kirkland from costco ? Yes. Costco positions their store brand as a major part of their appeal. This attracts more consumers to their stores, which A. Increases membership, for which there's an annual fee, and B. Increases traffic, increasing sales of high margin items as well as the low margin store brand.
      - B_ryJenkins 6y ago
        If Costco sells their products at other stores they are effectively shooting themselves in the foot: It is providing the lower price of their products to be accesed without paying for a membership; which is how Costco makes money.
      - lotsofpulp 6y ago
        Costco's value proposition is that they make (on average) no net income from sales of their products, and that you will find no other competitor who can sell the same quality products at a cheaper price (because costco's already selling them as cheap as possible). In exchange, they ask you to pay a membership fee, which is their net income. If they were to give away their reputation to other sellers by letting them sell their QC'd products, they would be lowering the value of their memberships.
    - indymike 6y ago
      That's not always the case. Sometimes the white label results in a small decrease to the name brand and captures sales to a different market.
  - AdmiralAsshat 6y ago
    Bear in mind, I have no idea how wholesalers work in this day and age. But once upon a time, a wholesaler like Costco sold stuff at cost (e.g. they charge what they paid the supplier for the product), and their revenue derived from the annual membership fees. So it's not in Costco's interest to start selling Kirkland Brand Extra Virgin Olive Oil at Safeway, because it wasn't a profit center to begin with. The whole point of selling their own branded product was: a) To reduce costs by controlling the entire means-of-production b) To ensure quality control on the product and build faith in the brand, which in turn c) Pulls people into the store, forcing them to buy a Costco membership if they want the product.
    - gamblor956 6y ago
      With regards to (a), Costco doesn't do that. Their entire Kirkland line is white-label products, excepting their pizzas which use dough made by regionally locally bakeries. They do have employees oversee (b), but they don't oversee the actual production; they conduct random inspections of shipped products. For example, Kirkland coconut water is simply white-label Vita Coco, and the made by label indicates it is packaged for them by the same company that produces Vita Coco.
    - e_y_ 6y ago
      I'm not sure about the old days, but I believe Costco has stated they cap their markup at 15% -- which along with membership fees pays for employee salary, operations, and profit. I'm guessing that's overall and some products are more profitable while others (like their rotisserie chicken) are subsidized.
  - triceratops 6y ago
    One of the reasons I keep a Costco membership is for access to Kirkland products. And I think they know that a lot of their customers feel this way.
- mtgx 6y ago
  > one of those rare instances You said it, not me. We can't have policy revolving around a single company. The net positive would be greater in the market if platforms wouldn't be able to double-tip.
- gamblor956 6y ago
  Most of the Kirkland brand products are white-label products made for them by companies that sell competing name-brand products. Costco has employees that oversee the QC of these white-label products.
  - true_religion 6y ago
    Quality control is basically the differentiator in modern manufacturing. Intels high price chips, and low price chips are often the same chip except the low priced one failed quality control and had some of its circuits turned off.
    - LordDragonfang 6y ago
      This common process is called binning, in case anyone wants to read more on it. Wikipedia article, as a primer: https://en.wikipedia.org/wiki/Product_binning https://en.wikipedia.org/wiki/Product_binning
    - e_y_ 6y ago
      Chip binning is something of a special case. Most of the time, when part of a product fails, you have a useless/unsellable product that needs to be reworked or scrapped.
bradstewart 6y ago
The inhouse brands are quite often cheaper for the consumer. That's worth something.
- ocdtrekkie 6y ago
  They're cheaper because they're not "brand name". That doesn't mean the not brand name option needs to be owned by the retail store.
  - scarface74 6y ago
    And then they would be more expensive because they have to advertise and have their own supply chain. How does that help consumers?
    - p49k 6y ago
      There are grocery stores which sell cheaper off-label products that aren’t their own. The makers of those products don’t advertise and thus pass those savings to the consumer. It’s a system that’s already proven to work.
      - scarface74 6y ago
        Are we trying to protect consumers?
  - Cerium 6y ago
    I'm not sure about this. I think a lot of why store brands work is because you trust the store not to cheat you. If the product is bad you know who to blame. The store wants the product to be good because they will loose customers of they make bad house brand products.
    - p49k 6y ago
      A store that sells third party off-label products can still do quality control on those products and can take responsibility for what they sell, just as they would remove faulty brand-name products to protect their reputation.
scarface74 6y ago
So now we are going to pass laws that disallow cheaper house brands to “help” consumers?
- yourapostasy 6y ago
  With the rare exception like Costco, cheaper house brands often imply they're equivalent to brand name goods, but take unadvertised shortcuts in process and/or feedstock, misleading consumers who don't take the time to carefully compare to weigh whether the shortcut is worth the value to them. I wouldn't mind house brands as much if supply chain information and process information was transparent across all companies, but that supply chain information is a pseudo-trade secret (and for real-time supply chain information, definitely a trade secret) [1], and you can forget about obtaining process information. I do use house brands for some goods personally, but this is the result of many years of a lot of careful vetting and monitoring ingredient lists that I know is not commonplace nor even feasible with many retail consumers. House brands can be a useful tool in the market, but they can be abused in too many ways for me to relax my vigilance as a consumer. They also can be abused in too many ways in their distribution channel role to obtain highly-granular, time-sensitive competitive information that normally wouldn't be available in the open market, for me to completely accept their unregulated deployment. I wouldn't go as far as to say ban house brands by law. But I wouldn't want to keep them completely unregulated in all contexts like we are currently doing, either. Happy to change my mind with any new information anyone cares to share though, as this isn't an area I keep a close eye upon. [1] https://www.importyeti.com/ https://www.importyeti.com/
  - scarface74 6y ago
    Housebrand OTC drugs in particular are the same as the name brand equivalent. There was a Freakonomics episode where they said pharmacists overwhelmingly choose house brand OTC products. House brands of any product have to pass the same relevant regulations.
    - yourapostasy 6y ago
      Yep, likely because OTC pharma is a tightly-regulated market? However, there are still gaps I haven't found explanations for yet, so I must be misunderstanding how house branding works. For example, house brands have not materially impacted the insulin market [1] even though it is quite regulated to my best understanding. Even when insulin patents expire, there haven't been house brands introduced on more modern formulations [2] [3]. Nor have house brands moved into vaccine production. There is probably much, much more than meets the consumer retail eye to house branding, and I'd love to get an insider's look at the factors and considerations around the decision to roll out a house brand product. [1] https://insulinnation.com/treatment/why-walmart-insulins-arent-the-answer-to-high-insulin-prices/ https://insulinnation.com/treatment/why-walmart-insulins-are... [2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4955122/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4955122/ [3] https://www.pbs.org/newshour/health/insulin-market-shakeup-patients https://www.pbs.org/newshour/health/insulin-market-shakeup-p...
JackFr 6y ago
> I don't think anything good would be lost if store brands went away A cheaper alternative for consumers? Consider some consumer good made overseas produced at the same factory for both the name brand and store brand. As a consumer why should I have to pay for the huge marketing spend the name brand needs to recoup? I don't see how harming consumers is a useful end of anti-monopoly laws.
- srtjstjsj 6y ago
  No-name brands don't have to be store brands, and aren't always.
reaperducer 6y ago
They're usually just rebranded from some other company anyways This is a common belief, and also mostly false. I think it's common because it used to be true, but isn't anymore. With the economies of scale that a company like a Target or a Wal-Mart have these days, plus the ever-declining cost to manufacture goods, most store brands are actually run for those stores, and not re-labeled big brand goods, or seconds that were rejected by the primary contractor.
- delfinom 6y ago
  Depends on the product really. Some name brands don't even formulate the product themselves but rather just stamp their name on it just like the stores would. The result is the true manufacturer is able to manufacture the same good under multiple brands rather easily.

AdmiralAsshat 6y ago

You'd lose Costco's Kirkland brand, which is one of those rare instances of the store brand often being better than the name-brand.

codegladiator 6y ago
Why can't they still sell it at stores which they don't owe?
- Miraste 6y ago
  Better to cancel the line than supply competitors with better cheaper products than your own store.
  - codegladiator 6y ago
    Sorry I don't get the point. Costco's competitors selling Costo's cheaper product would still harm costco ? Does costco get some extra benefit if the consumer buys Kirkland from costco ?
    - Miraste 6y ago
      > Does costco get some extra benefit if the consumer buys Kirkland from costco ? Yes. Costco positions their store brand as a major part of their appeal. This attracts more consumers to their stores, which A. Increases membership, for which there's an annual fee, and B. Increases traffic, increasing sales of high margin items as well as the low margin store brand.
    - B_ryJenkins 6y ago
      If Costco sells their products at other stores they are effectively shooting themselves in the foot: It is providing the lower price of their products to be accesed without paying for a membership; which is how Costco makes money.
    - lotsofpulp 6y ago
      Costco's value proposition is that they make (on average) no net income from sales of their products, and that you will find no other competitor who can sell the same quality products at a cheaper price (because costco's already selling them as cheap as possible). In exchange, they ask you to pay a membership fee, which is their net income. If they were to give away their reputation to other sellers by letting them sell their QC'd products, they would be lowering the value of their memberships.
  - indymike 6y ago
    That's not always the case. Sometimes the white label results in a small decrease to the name brand and captures sales to a different market.
- AdmiralAsshat 6y ago
  Bear in mind, I have no idea how wholesalers work in this day and age. But once upon a time, a wholesaler like Costco sold stuff at cost (e.g. they charge what they paid the supplier for the product), and their revenue derived from the annual membership fees. So it's not in Costco's interest to start selling Kirkland Brand Extra Virgin Olive Oil at Safeway, because it wasn't a profit center to begin with. The whole point of selling their own branded product was: a) To reduce costs by controlling the entire means-of-production b) To ensure quality control on the product and build faith in the brand, which in turn c) Pulls people into the store, forcing them to buy a Costco membership if they want the product.
  - gamblor956 6y ago
    With regards to (a), Costco doesn't do that. Their entire Kirkland line is white-label products, excepting their pizzas which use dough made by regionally locally bakeries. They do have employees oversee (b), but they don't oversee the actual production; they conduct random inspections of shipped products. For example, Kirkland coconut water is simply white-label Vita Coco, and the made by label indicates it is packaged for them by the same company that produces Vita Coco.
  - e_y_ 6y ago
    I'm not sure about the old days, but I believe Costco has stated they cap their markup at 15% -- which along with membership fees pays for employee salary, operations, and profit. I'm guessing that's overall and some products are more profitable while others (like their rotisserie chicken) are subsidized.
- triceratops 6y ago
  One of the reasons I keep a Costco membership is for access to Kirkland products. And I think they know that a lot of their customers feel this way.
mtgx 6y ago
> one of those rare instances You said it, not me. We can't have policy revolving around a single company. The net positive would be greater in the market if platforms wouldn't be able to double-tip.
gamblor956 6y ago
Most of the Kirkland brand products are white-label products made for them by companies that sell competing name-brand products. Costco has employees that oversee the QC of these white-label products.
- true_religion 6y ago
  Quality control is basically the differentiator in modern manufacturing. Intels high price chips, and low price chips are often the same chip except the low priced one failed quality control and had some of its circuits turned off.
  - LordDragonfang 6y ago
    This common process is called binning, in case anyone wants to read more on it. Wikipedia article, as a primer: https://en.wikipedia.org/wiki/Product_binning https://en.wikipedia.org/wiki/Product_binning
  - e_y_ 6y ago
    Chip binning is something of a special case. Most of the time, when part of a product fails, you have a useless/unsellable product that needs to be reworked or scrapped.

bradstewart 6y ago

The inhouse brands are quite often cheaper for the consumer. That's worth something.

ocdtrekkie 6y ago
They're cheaper because they're not "brand name". That doesn't mean the not brand name option needs to be owned by the retail store.
- scarface74 6y ago
  And then they would be more expensive because they have to advertise and have their own supply chain. How does that help consumers?
  - p49k 6y ago
    There are grocery stores which sell cheaper off-label products that aren’t their own. The makers of those products don’t advertise and thus pass those savings to the consumer. It’s a system that’s already proven to work.
    - scarface74 6y ago
      Are we trying to protect consumers?
- Cerium 6y ago
  I'm not sure about this. I think a lot of why store brands work is because you trust the store not to cheat you. If the product is bad you know who to blame. The store wants the product to be good because they will loose customers of they make bad house brand products.
  - p49k 6y ago
    A store that sells third party off-label products can still do quality control on those products and can take responsibility for what they sell, just as they would remove faulty brand-name products to protect their reputation.

scarface74 6y ago

So now we are going to pass laws that disallow cheaper house brands to “help” consumers?

yourapostasy 6y ago
With the rare exception like Costco, cheaper house brands often imply they're equivalent to brand name goods, but take unadvertised shortcuts in process and/or feedstock, misleading consumers who don't take the time to carefully compare to weigh whether the shortcut is worth the value to them. I wouldn't mind house brands as much if supply chain information and process information was transparent across all companies, but that supply chain information is a pseudo-trade secret (and for real-time supply chain information, definitely a trade secret) [1], and you can forget about obtaining process information. I do use house brands for some goods personally, but this is the result of many years of a lot of careful vetting and monitoring ingredient lists that I know is not commonplace nor even feasible with many retail consumers. House brands can be a useful tool in the market, but they can be abused in too many ways for me to relax my vigilance as a consumer. They also can be abused in too many ways in their distribution channel role to obtain highly-granular, time-sensitive competitive information that normally wouldn't be available in the open market, for me to completely accept their unregulated deployment. I wouldn't go as far as to say ban house brands by law. But I wouldn't want to keep them completely unregulated in all contexts like we are currently doing, either. Happy to change my mind with any new information anyone cares to share though, as this isn't an area I keep a close eye upon. [1] https://www.importyeti.com/ https://www.importyeti.com/
- scarface74 6y ago
  Housebrand OTC drugs in particular are the same as the name brand equivalent. There was a Freakonomics episode where they said pharmacists overwhelmingly choose house brand OTC products. House brands of any product have to pass the same relevant regulations.
  - yourapostasy 6y ago
    Yep, likely because OTC pharma is a tightly-regulated market? However, there are still gaps I haven't found explanations for yet, so I must be misunderstanding how house branding works. For example, house brands have not materially impacted the insulin market [1] even though it is quite regulated to my best understanding. Even when insulin patents expire, there haven't been house brands introduced on more modern formulations [2] [3]. Nor have house brands moved into vaccine production. There is probably much, much more than meets the consumer retail eye to house branding, and I'd love to get an insider's look at the factors and considerations around the decision to roll out a house brand product. [1] https://insulinnation.com/treatment/why-walmart-insulins-arent-the-answer-to-high-insulin-prices/ https://insulinnation.com/treatment/why-walmart-insulins-are... [2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4955122/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4955122/ [3] https://www.pbs.org/newshour/health/insulin-market-shakeup-patients https://www.pbs.org/newshour/health/insulin-market-shakeup-p...

JackFr 6y ago

> I don't think anything good would be lost if store brands went away A cheaper alternative for consumers? Consider some consumer good made overseas produced at the same factory for both the name brand and store brand. As a consumer why should I have to pay for the huge marketing spend the name brand needs to recoup? I don't see how harming consumers is a useful end of anti-monopoly laws.

srtjstjsj 6y ago
No-name brands don't have to be store brands, and aren't always.

reaperducer 6y ago

They're usually just rebranded from some other company anyways This is a common belief, and also mostly false. I think it's common because it used to be true, but isn't anymore. With the economies of scale that a company like a Target or a Wal-Mart have these days, plus the ever-declining cost to manufacture goods, most store brands are actually run for those stores, and not re-labeled big brand goods, or seconds that were rejected by the primary contractor.

delfinom 6y ago
Depends on the product really. Some name brands don't even formulate the product themselves but rather just stamp their name on it just like the stores would. The result is the true manufacturer is able to manufacture the same good under multiple brands rather easily.