Recession Brands

During a recession (or "economic slowdown" if you live in Washington, DC like me), it seems as though everyone suffers. Every once in a while, though, we hear about the mythical "recession-proof" business, brand, or job and the reason as to why it is able to resist the financial condition of the market. In this case, store brands (or house brands) not only resist a recession, but thrive in it.

There are 3 tenets to a successful store-branded product that make it a powerhouse on the shelf:

1. They are usually priced lower, per volume, then their name-brand competitors,
2. Their quality is about the same as the nearest comparable product and,
3. The store's profit margin on them is typically much higher than with the name-brand products.

During a recession, people look to save money in the easiest of places, and so store brand sales rise as the Dow drops.* Because of the quality and price, store brands are the low-hanging fruit when looking to cut everyday costs and as their sales rise, so do the profits of the store.

So what can you take away from this? This is an example of a successful brand model that doesn't rely on messaging, visual appeal, or any of the other traditional branding attributes. This perfect storm of success is due to the unsung heroes of great branding: price, position, and quality.

* Ziobro, Paul. Store Brands Boost Kroger Profit. Wall Street Journal. September 17, 2008.