Rue 33 Premium Vodka, the latest product offering from Sam’s Club, a subsidiary of Wal-Mart, illustrates that store brands are now completely entrenched in the shopping habits of mainstream consumers. The new product will be added to the discount retailer’s growing Member’s Mark store brand.
Store brands, also known as private labels, are a win-win situation for stores because they offer lower prices for consumers and higher profit margins by selling merchandise that has been produced without costly vendors in the middle.
Retailers such as Target and Wal-Mart fill their shelves with self-branded items that compete on price with a variety of big name national brands like Crest, Johnson & Johnson, and Purina. Supermarket chain Kroger has one of the deepest private-label manufacturing networks in the US and garners more sales from private-label products than Wal-Mart, its primary competitor in grocery sales.[more]
The grocery chain Trader Joe’s became known for its Charles Shaw brand of inexpensive wines, which were nicknamed “Two Buck Chuck” when they were introduced. Though they’ve since increased in price, the wines still retail for less than $4 a bottle. Trader Joe’s claims Charles Shaw is the nation’s best-selling wine.
Sam’s Club competitor Costco features its own line of private label products under the brand name Kirkland. Though vodka is part of Kirkland’s offerings, it is not in the same category as Rue 33, Sam’s Club’s premium vodka.
At $28 a bottle, one has to wonder if Rue 33 will mark the point where consumers no longer consider store brands a bargain.