According to this article, Coke and Oreos are not the compaines to be investing in right now. "Grocers report that customers in record numbers are going for the generic house brand, priced at up to a dollar less." Last week I bought an entire box of cereal for 54 cents from Target. It didn't taste nearly as good as the leading brand, but it was edible...I think. I buy generic if I think its quality is good enough for its price. All in all, I generally prefer the leading brand, but if the generic brand is almost as good (and probably at least a dollar less), I usually grab the generic brand.
If you scroll down this article, you will see many familiar brands. Apparently the generic brands are taking over these leading brands. It kind of seems shocking to me to hear that even brands like Johnson & Johnson and Coca-Cola are suffering. When I worked at a grocery store three years ago, those were some very popular brands that made their way down the black revolving belt many times a day. So why are people going for generic brands? The article states this: "In similar eras in the past, it's turned out that consumers downshift into lower consumption modes quite rapidly and with remarkable ease, and even start to pride themselves on developing an upside-down view of luxury."
Also according to the article, some companies might not see as much of a downfall. Family Dollar and McDonald's were two familar names. This makes sense to me because of the low prices of their product. This article states that McDonald's was just one of two DJIA companies to soar in the stock market in 2008. According to Owen, “You’re more likely to encounter a McDonald’s than a Burger King or Wendy’s on your way to work, which gives it a tremendous advantage in the breakfast category." This isn't true in Valley City, but in other cities, I can spot the golden arches from a mile away....
So does this mean we should all go invest in McDonald's? A recent survey of franchisees by New York City found franchisees worried that rising labor and raw product costs will crimp margins. According the survey, franchisees also believe business will be only fair to good through the first six months of 2009.
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Heidi,
ReplyDeleteThis does not surprise me at all. With the way the Economy is suffering right now, people are going to pinch-pennies wherever they can, and that is the ticket. When people go shopping (I, too, worked at a grocery store) I would often find people calculating costs before checking out. It used to be shop for what was good and worry about it later (weight wise I mean). But now, people have to watch everything. Considering everything that even people our age are going through, I do not find it shocking that people are switching brands. Soon, the leading brands will be the off-brands, and the generics will have taken over. :)
I really liked your blog this week. This is my first year of college living off campus, and not having a meal plan, I have discovered how expensive buying groceries can be. I remember shopping with my mother when I was younger and refusing the our family brand cereal...I NEEDED the real captain crunch. Now, not only the cereal in my apartment, but the yogurt, granola bars, lunch meat, etc. is allllll store brand. Name brand is way too expensive! I'd like to apologize to my mom for making her buy the real coco puffs. =)
ReplyDeleteYour topic this week is interesting and something that everyone has experienced dealing with. I personally always thought I needed brand name things, then realized that it does not kill a person to get by with the off brands. Sometimes I enjoy off brands better for certain items. Other items such as peanut butter and ketchup a person should never get the off brand.
ReplyDeleteWow! McDonald’s stock is up. If there is something they have done correct all these years is place their stores in the right locations and make those Golden Arches an icon. My daughter plans her travel route away from the arches to keep her 4 years old in the car seat. The second job I every held back in the early 70s was at a McDonald. And that store is still there – the one north of West Acres.
ReplyDeleteI too push toward generic unless they prove themselves unworthy. If it’s a few pennies, I go with the brand name. That too may changes as times get tougher.
Heidi,
ReplyDeleteBeing a college kid usually means you’ll be short on cash most of the time. So I completely understand and appreciate generic brands. Food is incredibly expensive and in my opinion, overpriced. Being from Canada I find that a lot of products in America are cheaper than they would be in Canada, so occasionally I don’t think they are all that expensive. However, since this year is my first year living off campus and buying food. I try to buy the bare minimum. I make a list, get in and get out! That way nothing tempts me and I end up spending more money : (
I have always had an appreciation for the generic brands of food. In some cases, I think they even taste better than name brands, but maybe that's just because I've gotten used to them over the years. It does not surprise me that McDonald's is still doing well. A common food comment I hear around campus is that students wish there was a McDonald's in Valley City. Also, in my "Russia and Her Neighbors" class we learned that McDonald's recently made a huge investment in Russia, so I don't think McDondald's will be suffering anytime soon.
ReplyDeleteIt’s sad that in our depleting economy today, college kids have to take the largest blow in our wallets. It already feels like a recession when the economy is ok for the average college kid talk less about now. It however is no surprise to see Mc Donald’s stock and generic brands do so well since everyone is looking for the easiest way out.
ReplyDeleteCutting back on expenses during this hard time is inevitable but unfortunately, this is only going to increase the demand for such brands. Hey I have my favorite exclusive brands of Asian noodles I use to buy but these days Mc Donald’s dollar menu and Ramen noodles have been my favorite lately…I wonder why…