Marketplace - House brands

Episode Date: January 24, 2025

Private label sales hit an all-time high in 2024, a new report shows. We’re talking about retail stores’ in-house brands, like Costco’s Kirkland or Target’s Everspring. What does it say about today’s consumers that they’re willing to abandon brand loyalty on certain items in favor of (usually cheaper) private label goods? Also in this episode: A seamstress upcycles fan gear and a retiree volunteers in his adopted community to build hiking trails.

Well, let's talk about this week, shall we? From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizdall. It is Friday today. This one is the 24th of January. Good as always to have you along, everybody. In Los Angeles, I'm Kyle Rizdahl. It is Friday today. This one is the 24th of January. Good as always to have you along, everybody. One week does not, of course, an entire presidency define,

but we learned some things the past five days about where this economy is going. I think. David Gura is at Bloomberg. Anna Swanson is at the New York Times. Hey, you two. Hey, Kyle. Anna Swanson, we go to you first,

and I will say only this. We were promised tariffs, and yet here we are. End of week one. I'm kidding. No tariffs. I mean, they are clearly coming, right? Canada and Mexico on the first February, and China maybe, I don't know. But it does seem that there has been a delay, shall we say.

Yeah, it was somewhat surprising because the president had said on Truth Social that he would do tariffs on Canada and Mexico and China on day one. Now that's February 1st. We'll see if that actually really happens because those are sort of a negotiating tactic against those countries. But I think that at his core, even though we didn't see tariffs on day one, Trump still really likes and believes in tariffs. And personally, I think it could mean just a bigger windup for some of the same tariff actions. This went a little more

under the radar, but on day one, he signed an executive order on trade that requested reports on about two dozen different trade issues by April and so those reports I think are gonna give him a lot of ammo to pursue different trade actions in the future if he wants to and they could also help shore up the legal justification for tariffs so they wouldn't be challenged and struck down in court so we could ultimately see you know tariffs that are more kind of comprehensive and strategic just in a few months instead of day one.

Let me read between the lines here. You think you think they're coming for real? I think something is coming for real. I mean, you know, he's proposed so many different plans we don't know exactly what they are. Are they, you know, universal tariffs for revenue? Are they against Canada, Mexico, China, Europe? But, you know, I know from a lot of years of reporting that he really does believe in tariffs. And so I do expect to see them. Interesting to me, David Gura, that he wants to renegotiate early the trade deal that he signed with Mexico and Canada, the USMCA. He's kind of going all in here early. He's going all in. And, you know, it wasn't too long ago that he was really proud of that

agreement that he negotiated with Canada and Mexico. But of course, he's been making these threats since before he was inaugurated and left everyone hanging. I mean, inauguration was odd chiefly because we were left wondering all day how many executive orders are they going to be? What are they going to be on? And kind of the week proceeded from there. And then there was this big meeting in Switzerland, this meeting in Davos, and essentially this

is a big deal in my world at Bloomberg. And so there's like a week of interviews with CEOs, and I'd characterize the kind of zeitgeister vibe there as a lot of kind of optimism and excitement about what he's doing. Really? But then in every interview, a question of what are these tariffs going to be, how big are they going to be? But it did feel like a markedly different set of executives than the last time he was there in 2020 and in 2018 before that.

Yeah. I thought it was interesting, Ana, that Ursula von der Leyen on whatever it was the first day, Monday or Tuesday, gave a speech in which she basically said, number one, Europe, we're on our own, and number two, the sort of global trade for the common good order that we've had for the last 25, 30 years is no more. Right. Well, yeah, a few days after that, Trump, you know, was also pretty critical of Europe in his speech to Davos, right? Talking about tariffs on Europe. So apparently the feeling is mutual. But yeah, it's been interesting to see Europe also in recent weeks has kind of extended

its efforts at signing new trade agreements with other countries. And it really is just a big shift from the Biden administration, where the United States and Europe were working more closely as allies to take on issues with China. With the Trump administration, it's kind of America against the world again. And that includes a more confrontational approach to Europe. Speaking of confrontational approaches, David, he also said in that speech, he's going to demand lower interest rates, which number one, that's not the way it works.

And number two, also his policies in and of themselves could prove to be quite inflationary. Yeah, he also demanded lower oil prices and kind of in compliment. But yeah, this is this as you know, this is going to be a big test of Jay Powell, the Fed chair, who has thus far shown a lot of resolve and been really adamant that the Fed is insulated from political influence. But I think what we got this week was a taste of what's to come. And that is this president talking an awful lot about how he knows interest rates better than the current Fed chairman. He's going to opine on this a lot. There's been some speculation that he might work some way of kind of being somebody who has to be consulted on interest rates. We'll see what happens there. But I think what we're seeing shape up here is just a

test that's going to play out over the course of this term. You know, how can Jay Powell, whose term isn't up until 2026, deal under the pressure of a president who, unlike his predecessors, really wants to have his opinion on this known? So David, on the theory that the sound you hear is Jay Powell's head hitting his desk, we're going to play my favorite game. What is J-PAL thinking in five words or less? You get to go first. Anna gets to think about it for a minute.

J-PAL, Fed meets next week. What is J-PAL thinking, five words or less? David, go up, go. What will the tariffs be? And I think that's just the big question that they're going to have to wrestle with as they come up with each and every interest rate decision is sort of, what's he actually going to do and what's he actually going to do and what's the effect going to be just to go back to what you said a minute ago Kai

so so many of the things he's proposed are as any academician will tell you inherently inflationary I think it has to be something that's going to be discussed a lot when the Fed meets next week. Anna before we get to your answer to the question it's worth pointing out here that Powell will almost certainly say we got to wait to see what the tariffs do, right? Just in terms of what David was saying, Ana, that we just don't know, and he's not going to speculate, right? He's not going to answer the hypothetical.

Yeah, yeah. Actually, he was asked about it in December, and he talked about how they were dusting off their data from tariffs in 2018 and seeing what they should do. But there is a debate about whether the Fed should, you know, consider them more of a one-time price increase and quote unquote look through them or treat them as inflationary and then act against them. For whatever it's worth, I did see go by

in one of my news feeds this past week, maybe it was 10 days or so ago. What if the Fed's first move of this year is, not even first move, but what if the fed at some point Raises and doesn't lower and then what happens anyway, Anna Swanson over to you. You've had plenty of time to percolate What is Jay Pal thinking in five words or less you're gonna send us off into the weekend Well since since since David took the tariff when I thought I you know Just make a little joke and and say don't call me bonehead because he did use that term before, right? Trump spent the first presidency publicly attacking the Fed. I know that Powell says that

he's not focused on that, but I think the question is Trump is certainly going to try to jawbone him this time, but is he going to do more than that, right? Yeah, you gotta believe Powell reads the papers. All right, on us once and at the New York Times, Jay Powell, David Gura, not Jay Powell, David Gura at Bloomberg. Maybe we'll get Powell on, I don't know. Maybe never again after this. David Powell, David Gura at Bloomberg.

See you guys, have a nice weekend. Thank you. Thanks. Wall Street to end this week. Traders, we're a little cranky. Details, numbers, y'all know the drill. American consumers need them though this economy does can be a fickle bunch. We have talked about that quite a bit. Price is probably first among equals in why consumers shop the way they do. And new data from the Private Label Manufacturers Association shows that store brand sales, names like Target's

Everspring or Costco's Kirkland, the data backs that up. Brand sales hit an all-time high in 2024. Marketplace's Kristin Schwab has more. Shoppers traditionally turn to private labels when they're looking to save money on items that feel sort of ho-hum. Paper towels, glass cleaner, beans. But Matt Hammery, a grocery consultant at Alex Partners, says he's seen a shift. There's a big uptick in customers being willing and in fact interested to buy prepared foods, chilled foods of those sorts of, you know, fresher, just warm it up, ready to eat. Refrigerated foods was the fastest growing

private label category last year, according to the Private Label Manufacturers Association. And Hammery says that shows people trust retailers enough to buy their house brand of perishable foods. Part of that trust is because of the sheer growth of national chains like Walmart and Kroger and how well they've gotten to know their shoppers. The retailer decides what the flavor profile would be, the quality, and effectively what they're doing there is they are taking a couple of steps further in building their customer relationship. It's part of the reason why stores like Trader Joe's and Aldi have cult

followings. But not all generic products are a slam dunk. Natalie Cutler leads retail and consumer products at BDO. Retailers have, in most cases, just one chance to get it right. One low-performing tub of dishwasher pods is enough to deter people from making the leap to laundry detergent or even trickier categories like shampoo. Jan Benedict Steenkamp, a professor of marketing at UNC Chapel Hill, says personal care is an area generics have yet to conquer. Private labels are still sold mostly based on logic, you know, on rationality. And in personal care, people are actually purchasing a dream, they're purchasing an emotion.

Something that feels aspirational or like a simple pleasure. For Hammery at Alex Partners, that's a crispy can of Diet Coke. You know, I don't have it all the time, but when I do, I love it and I won't take anything else for it. With certain purchases, brand loyalty is hard to break. I'm Kristin Schwab for Marketplace. If you need to know things as soon as you get up, I have a suggestion for you. David Brancaccio and the gang at the Marketplace Morning Report get out of bed really early

to get you all the business and economic news you need to start your day. Check it out. We are down to four, count them, four teams left standing in the National Football League playoffs. Commanders and Eagles are the early game on Sunday, Chiefs bills in the late game. Four teams in, of course, means 28 teams out, and 28 teams worth of game day outfits that fans wore all season long go back in the closet. Here with today's installment of our series, My Economy.

My name is Kennedy Tweeten. I live in Mankato, Minnesota And I am the owner of the Aries archive. I Use thrifted and reworked materials to create game day pieces I started the Aries archive right after I had my son. I Had really bad postpartum depression. And my now husband said, you used to love sewing. You should get back into that and you'll be able to be around our son and work at the same time.

So I picked that up. My sister-in-law is an influencer for the Vikings and she said, I need custom pieces because I need content. If you could send me a box of stuff and I'll promote it. It just took off from there. My favorite materials to use are actually like blankets and towels and flags actually is one of my favorite things. All of the business is through social media. Most of it is through Instagram. And the biggest challenge is being able to make enough material and have enough content to post. Off season, I typically slow down. I still try to make things, you know, like a couple things a week.

And now specifically, like I'll be shifting more into hockey, which is new, so I'm really excited about that. I have learned so much about patience. Nothing good comes from being rushed. That is within, you know, the website development, that's within the pieces that I sew. I feel like I've learned so much about just grinding out, even if it doesn't work right away, it will eventually.

Kennedy Tweeten in Mankato, Minnesota. Aries Archive is her business. Tell us about your economy, would you? No matter who you're rooting for, Go Chiefs Marketplace.org. Coming up... There's an insatiable appetite for people to look and feed yaks. Yeah, we give you a little bit of everything on this program, but first, let's do the numbers. Dow industrial is off 140 points today, a third of 1% finished at 44,424. The Nasdaq subtracted 99 points, about a half percent, 19,954.

The S&P 500 down 17 points, three tenths percent, 6101. For the week, the Dow picked up just shy of 2.2%. The Nasdaq added one and two-thirds percent. The S&P 500 gained about one and three-quarters of one percent. Boeing descended 1.4 percent today after warning that its loss for the fourth quarter is likely to be nearly three times as big as analysts had been expecting. The planemaker said the red ink is down to fewer jetliner deliveries and also that strike last year.

United Airlines climbed 1.9 percent after a couple of brokerage firms raised their price targets for its shares. How about railroads you say? CSX slowed down 2.9% after the railroad reported its profits in the fourth quarter down almost 7% year on year. The auto industry, we got it all man, planes, trains, automobiles. Auto industry has plenty of Texas Instruments chip stock tanked up, thank you very much. I'll say that again, Texas Instruments chips stocked up, thank you. Anyway, chip maker forecasts profits for the firm quarter

won't match analyst estimates. TI subtracted seven and a half percent. Sometimes things are hard to say. You're listening to Marketplace on my drive home from all my three to midnight ER shifts. Kai and the gang keep me awake and interested for my 30 minute drive. For someone not in the financial field, it's a fantastic synopsis of all things business

and economics. I love the commitment to showcasing a steady stream of brilliant and articulate women who are experts in their field. Join me in supporting Marketplace with a gift today. Go to marketplace.org slash donate. This is Marketplace, I'm Kai Rizdal. On a sunny Tuesday morning this past November,

I stepped onto a trailhead in Cumberland County, Tennessee. I'm gonna be too warm, man. I have to take this sweater off. It's mostly rural out here, kinda halfway between Nashville and Knoxville, not quite 65,000 people. Morning John, how are you? Fine, how are you?

Good, thanks. Beautiful weather you brought with us. John Conrad is one of them. Been living here in Cumberland County for 13 years. I retired here and just love it. John was born and raised in the north of England, as you might be able to tell. And then with stops in Buffalo, Boston, and Tampa,

he landed here. The way we tell it is that Buffalo and Boston's too cold and Tampa's too hot. Halfway in between must be perfect. And it's been a great decision on our part coming here. Very nice. Let's go for a walk. OK. You're in charge. I am following you. All right. I'm here to meet people like John. He's 73, an engineer in his working life, but retirement has changed how he spends his time and his money. We're going to go for

a walk on the Soldiers Beach Trail, which we built 2015, 2017. Proved to be very popular. Tell me about this We Build Trails thing. How did you come to be in the trail building business? For very selfish reasons. During my lifetime, I've been an occasional hiker, went on vacation and things like that. But when I moved to Fairfield Glade, which is a beautiful area with hills and valleys

and creeks, I was extremely disappointed that there were no trails. There was no access to all this beautiful countryside. Cumberland County has one of the oldest labor forces in the country according to ADP. The county seat is a town called Crossville. But Fairfield Glade, where John lives, is a retirement community with a median age of almost 70. In a rather arrogant way, and much to the horror of my wife,

I wrote to the general manager and said, I'd like to volunteer, to organize volunteers, to build some hiking trails here, is that okay Fortunately they said go for it. We formed a Trails Committee and it turns out I have a knack for finding talent and people and exploiting them for my benefit. Well everybody's benefit, come on. Well yeah. You're gonna be hearing a lot over the next couple of years about the wave of retirements coming to this economy. It's a massive demographic shift that we've seen coming for decades, and it's going to have implications for where people live, where they work, and where they spend their money.

In Fairfield Glade, a lot of the retirees are healthy. They're also relatively active, like John. The Trails Committee in Fairfield Glade love doing rock work. Rock work? Rock work. They love picking up huge... Are you kidding me? ...stone slabs and either making staircases with them or putting retaining walls and the

like. God bless them, right? Exactly. I much prefer sitting at a desk sending emails, personally. That's right. Oh, man. Boy, it is lovely out here. This is great. It was crisp the day we were there, fallen leaves underfoot on the meandering trail drifting down from the maple and oak trees up above. Alright, no pressure here, John, but here's a stump that they missed. I'm just saying. Okay, I'll tell them. It was noted on national radio that you missed a stomp.

Okay. Are you a trails guy from way back, like from when you were a kid? No, no. I mean, I say I hiked occasionally, maybe three or four times a year, and that was about it. In retirement, it's become something of an obsession now. Retirement's a wonderful invention. I just love it.

Fills your time up, I guess. It does. I keep busy, have a reason for getting up in the morning. My mother says to me all the time, she says, Kai, there's so much time when you're retired. Yeah, I disagree. You need a project. John's got multiple projects going on. Trail building, of course. He also puts on an annual hiking marathon to promote use of the trails.

And he created a tour group that visits local businesses and organizations. It's got about 500 people in it. We do police departments, fire departments, colleges. Anything where someone is prepared to talk to 20 mainly retirees. We have, I think it's 120 destinations we've now visited. Boy, that's impressive.

And some of them multiple times. We have a yak ranch in Crosswell. I'm sorry, a yak ranch? A yak ranch. I believe we've been there 43 times now. Oh, no! There's an insatiable appetite for people to look and feed yaks cute things. And Ali has a good story to tell.

Oh that's great. I've just realized. What's that? Did we miss the trail? Yeah. I couldn't, my brain was having trouble figuring out what that bridge was. I thought we shouldn't have been going over a bridge. What'd you do in Tennessee, Kai?

Well I got lost with the trail. That's right, yeah. He built the damn trail and still got lost. We did find our way to the lake view, eventually. This is, I wish I'd just brought a book. I'd send you guys back to the car and just stay here for a couple hours. Honestly.

It's a nice, peaceful place, isn't it? This is great. Beautiful lake. God, it's beautiful. Here's the catch though, and it's the reason we've come. Not everybody in Cumberland County gets to have a peaceful, active retirement, like John Conrad.

As we start to head back, tell me about the Fairfield Glade and Crossville divide, because they're very different places. They are indeed. The John Conrad perspective is that Crossville has been here many years with local Tennesseans and quite content. And somebody came up with a bright idea of building Fairfield Glade, building whatever it is, 15,000 lots. And people started moving here and building homes. And they had more disposable income, I guess you'd put it, than the majority of people in Crossville.

And this has led to a kind of divide between the two communities where the people in Fairfield Glade are mainly retirees with a little more money, the people in Crossville feel that these outsiders coming in with their different opinions and views and attitudes. I personally have not experienced in 13 years anything but a welcoming attitude, but you constantly hear stories about, oh this happened to so and so, all that happened. Well that's always the way. That's always the way, yeah. So I am very pleased and proud of the fact that the trails help to unite. There's no metrics for measuring it,

but I just feel that it's doing good. We came to Cumberland County for more than just a morning walk in the woods, of course. We're starting a new series next week. It's called The Age of Work, because as the American workforce gets older, the way it is here in central Tennessee, some of the dynamics happening in Crossville and Fairfield Glade are going to play out all over the country. Well, John, this has been a pleasure.

All right. You're very welcome. I hope you know a little more about Cumberland County now. I do indeed. It's inspiring, actually, a has been a pleasure. All right. You're very welcome. I hope you know a little more about Cumberland County now. I do indeed. It's inspiring, actually, a little bit. Dead. Yes, you don't have to just sit by your fire and do knitting when you retire.

There are other possibilities. I'm going to tell my mom. Is that right? Yes. The Age of Work, episode one, coming on Monday. This final note on the way out today, which I believe comes properly filed under the heading Schadenfreude. The Wall Street Journal reports today that the Wall Street banks that loaned Elon Musk

part of the money that he needed to buy Twitter are getting ready to unload some of that debt at, and here's the relevant bit, 90 to 95 cents on the dollar. That is to say they want out so badly they are taking a loss. The Journal also reports on a Musk email to staff that the paper has seen that says, and here I quote, our user growth is stagnant, revenue is unimpressive, and we are barely breaking even. Our theme music was composed by BJ Lederman, Marketplace's executive producer is Nancy Fargoli, Donna Tam is the executive editor, Neil Scarborough is the vice president and general manager, and I'm Kyle Rizal. Have a great weekend, everybody. We will see you back here on Monday. All right? I'm your host, your host, your host, your host, your host, your host, your host, your host,

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