Retail trade media is abuzz over the hypothesis that consumers will shift their loyalties permanently to private labels after the recession.

Private labels have been around since the late 1800s, but consumer attitudes toward them are changing, perhaps even faster due to the downturn.

More than 30% of consumers polled are now “buying more store brand products” compared to a year ago, according to research conducted by the Private Label Manufacturers Association (PDF).

Is there really a sea change? Here are some perceptions and realities to consider:

Perception: Private labels are cheaper than manufacturers’ brands.
Reality: According to Fortune, private labels cost consumers 5-20% less than equivalent manufacturers’ brands.

Perception: Retailers make less money on private labels than manufacturers’ brands due to the lower prices.
Reality: Margins are an average of 10% higher on store brands than manufacturers’ brands.

Perception: Private labels are perceived to be of lesser quality.
Reality: It depends on the label, of course, but many are now perceived to be of at least equivalent quality, such as Sears Craftsman tools, Saks CLOTHES (Real) women’s apparel, and Kroger Private Selection foods.

In Private Label Strategy: How to Meet the Store Brand Challenge, a book by Nirmalya Kumar and Jan-Benedict E. M. Steenkamp, the authors say the concerns about quality and the social stigma attached to store brands have disappeared.

Perception: Private labels are perceived by consumers as generic commodities.
Reality: For the most part, those days are over.

Some private labels are perceived instead as extensions of the store’s brand. Loyalists to Trader Joe’s, for example,  sometimes drive hours to the nearest store to stock up on its products, about 85% of which are private label. Barry Silverstein in a brandchannel.com post, “Trader Joe’s: Quirky Mart,” describes the retailer as “less a grocery store and more a brand with a cult-like following.”

Other stores disguise their relationship to their private labels, often as part of a multi-pronged strategy to appeal to different customer segments and compete in different product categories. A few examples: Macy’s offers fashionable INC, traditional CHARTER CLUB, and trendy Style&co. Nordstrom sells under the classiques entier and Halogen labels. Kohl’s features sonoma, urban PIPELINE, apt. 9, and Croft&Barrow. All private labels.

Perception: Private labels are increasing their market share primarily due to the recession.
Reality: The downturn may be speeding up the trend, but retailers have been growing more sophisticated in their positioning strategies and gaining ground for quite some time. They want to offer consumers a range of options and prices for shoppers. When they notice a niche missed by the manufacturers, they often fill the gap with their own label.

Perception: After the recession, consumers will migrate back to manufacturers’ brands.
Reality: More likely, consumers will stick with the brands they prefer, whether manufacturers’ or retailers’.

According to an article in The Wall Street Journal by Julie Jargon and Ann Zimmerman, Sara Lee’s CEO Brenda Barnes says, “… (manufacturers’) brands are not dead. The question is: How do you make sure your brand is the No. 1 brand? There will be consolidation, over time, with only the No. 1, No. 2 and private-label brands remaining.”

This is a brand-by-brand battle, taking place in the minds of the consumers. Strong store brands, such as Sears DieHard and Walmart Great Value will likely be able to continue to transfer brand equity to their private labels. Smart retailers with differentiated brand names, such as Macy’s European-influenced ALFANI and Target‘s Archer Farms, will likely succeed, if they pay attention to their customers’ preferences and position their brands accordingly.

In other words, strong brands will succeed and weak brands will die, regardless of who owns them. It is the law of the jungle.

Do you perceive a difference in quality between manufacturers’ and store brands?