Retailers face off with name brands in recession

By Jessica Wohl and Nicole Maestri - Analysis

BOCA RATON, Fla./NEW YORK (Reuters) - U.S. retailers are increasingly pitting their own products against national brands to win sales and that battle will only get fiercer in a prolonged recession.

From Wal-Mart Stores Inc to Target Corp to drugstore chains, retailers are trying to boost profits by introducing or revamping their own branded products, such as food, tissues and detergent.

While none have talked about abandoning national brands, retailers are taking over more of the shelf space in their stores and promoting their own lower-priced private brands. They are also cutting back on how much they keep in stock as shoppers buy less.

That means branded product makers must show consumers their brands are worth paying for. Some, like Procter & Gamble Co, are using more coupons and highlighting value in their advertising.

But so are retailers. At the Walgreens Co store in Times Square, shoppers needing laundry detergent can choose a 100-ounce bottle of P&G's Tide for $18.49, pay $15.99 for the same sized bottle of Gain, also from P&G, or reach to the right and pick up Walgreen's own brand for $10.99.

If shoppers do not want to calculate the savings, Walgreen is eager to do it for them. A tag below its "W" brand of detergent tells shoppers they will save $5 if they buy its product instead of Gain.

Manufacturers are meeting analysts and investors at the annual Consumer Analyst Group of New York conference this week and the rise of retail brands is on their minds.

"I think there will be questions and concerns about increased private label usage and the effect on branded products," Edward Jones analyst Jack Russo said.