Generic is the new black

Generic grocery store items can be used to replace the more expensive name brand options.

Recently, I walked – for the first time ever – into an Aldi grocery store. For those of you who’ve never been to an Aldi, let me explain. It’s much smaller than a traditional grocery store – only about 20,000 square feet. The selection is edited. Rather than the 20 different bottles of extra virgin olive oil in all shapes and sizes I see in my supermarket, there was one. And like 95 percent of the rest of the products in the store, that one variety was a private label brand, made specifically for Aldi. It was also $3.69. There were other differences, too. Rather than a deli, there were pre-cut cold cuts packaged in a variety of ways. The produce and butcher sections were small. But everything looked fresh. And prices were not to be believed. I had just paid $4.99 for a three pack of fresh peppers – one red, one orange, one yellow. At Aldi a two-pack of peppers both larger and heavier (a good sign where peppers are concerned) than the ones I bought was $1.49. And a three pack of Hass avocados ready to be turned into guac was $1.99.

I could go on, but I won’t. You get the point. Anyway, I had just made a big run to the supermarket over the weekend, but I bought a few things to see how my kids would react to a cereal that looked an awful lot like Cinnamon Toast Crunch (but wasn’t) and granola bars that looked an awful lot like the Quaker Chewy variety (but weren’t). They didn’t seem to mind at all. And frankly, neither did I when I reached my paw into the cereal box for a mid-afternoon snack.

That the Aldi chain is growing so quickly – opening 80 to 100 stores a year to add to the 1,100 already in existence in the US – and adding to its customer base at a 10% annual clip is proof that the country is embracing generics in a whole new way.

Marketing expert Doug Harrison of The Harrison Group calls it “private label experimentation.” He says 70 to 75 percent of people have tried store brands and of those that do, 70 percent continue to buy them at least periodically. His research also found that many of those people feel really smart about the decisions they’re making. “For 80 percent of the people who’ve experimented, it’s a self-esteem booster. They’ve found a product that delivers just as well, so they’re making no sacrifice and saving extra money. For 20 percent it’s a self-esteem buster. These are people who’ve lost jobs, they’re going through the grocery store, picking generic Froot Loops and their kid is saying, `why do we have to have this.’ Some name brand items have important cues to people that they’re okay.”

So what’s the lesson here? Try the store brands when they look appealing – doing so can easily save you 20 to 50 percent. Just read the packaging carefully to make sure the ingredients are the same so that you’re getting what you want.

What do you think about generic versions of your favorite products?

Jean Chatzky

About Jean Chatzky

Jean Chatzky, the financial editor for NBC’s TODAY show, is an award-winning personal finance journalist, AARP’s personal finance ambassador, and a contributing editor for Fortune magazine. Jean is a best-selling author; her eighth and most recent book is Money Rules: The Simple Path to Lifelong Security. She believes knowing how to manage our money is one of the most important life skills for people at every age and has made it her mission to help simplify money matters, increasing financial literacy both now and for the future. In April 2013 Jean launched Jean Chatzky's Money School , a series of college-style, interactive online personal finance courses that give men and women across the country the opportunity to learn from and interact directly with her. Jean lives with her family in Westchester County, New York.
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4 Responses to Generic is the new black

  1. Shanita Britton says:

    Aldi is nice…if you can find one that isn’t too far from your house. Their prices are great and I have totally ‘bought in’ to purchasing private label goods. Of course, there are some name brands that I just have to have. But for the most part I will say that I can shop private label and my family doesn’t taste the difference. Also, did you know that Trader Joe’s was founded through a trust established by Theo Albrecht (one of the founding brother’s of Aldi)? So I see the similarities in the chain set up; they are very different but similar some ways.

    *I am a Wells Fargo employee.

  2. Monique Etheridge says:

    I think Aldi’s is great. The only problem is that I have to drive a distance to get there. I can’t wait for them to open a store near me!

  3. Vickie says:

    I have 2 Aldi’s relatively close to me but have never ventured in – mostly out of habit and not really understanding the M.O. of the store. Thanks for the info. I’ll check it out.

    - a Wells Fargo Employee

  4. alex says:

    I have shopped at Aldi’s for years. I am the mother of three boys. Aldi’s prices have helped me keep food and snacks in my home. A lot of people don’t like generic brands, but as long as they taste well I don’t care. With our economy a lot of people will begin to shop at Aldi’s.

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