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.

Shoppers are pictured in front of a Target discount store at the Glendale Galleria shopping mall on Black Friday in Glendale, California November 28, 2008. REUTERS/Fred Prouser

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.

Investors will not have to wait long to find out what’s in store when it comes to the brand battle. P&G, Kimberly-Clark Corp and Clorox Co are among the companies speaking at CAGNY on Thursday, the same day that CVS Caremark Corp issues quarterly results and gives an update on its business.

CROWDING OUT BRANDS

So far, consumers seem willing to try store brands for tissues, paper towels and other such products, while they tend to stick to brands they trust for items they ingest or put on their bodies.

In a poll conducted for Reuters by SheSpeaks, a marketing firm, almost 600 women were asked if they had to, would they replace a household product, such as paper towels, with a cheaper generic version, or would they replace a brand name personal care product, such as face cream.

More than 87 percent said they were more likely to replace the household product, while only 13 percent said they would choose to replace the personal care product.

Colgate-Palmolive Co said in late January it had not seen meaningful growth of cheaper private-label items in its categories, which include toothpaste, dishwashing liquid and high-end pet food.

But Arm & Hammer maker Church & Dwight Co Inc warned in early February that retailers who added more private brands to their shelves were pressuring the market.

Some more personal items are also not immune. Sales of Energizer Holdings Inc’s Playtex Gentle Glide tampons declined in the most recent quarter, due in part to private label growth.

STIFFER COMPETITION

And the competition is only going to get stiffer.

“The focus on private label in the U.S. among grocers, warehouse clubs and drugstores is greater than in any time in our history, and the quality gap between branded and private- label offerings has shrunk to near zero in many categories,” wrote Morningstar in a research note previewing major themes of the CAGNY conference.

Walgreen saw a double-digit percentage jump in private label sales during the last three months of 2008, as consumers really started to look for value. Now, about 21 percent of non- pharmacy sales at Walgreen come from private brands, excluding greeting cards, film and cigarettes.

At rival CVS, private label accounted for 15.5 percent of front-end sales in the third quarter, up 111 basis points from a year earlier. And CVS plans to increase that to 18 percent to 20 percent.

“A consumer who is really brand-loyal in this economy, has tried the private label and we think the quality of our private label is pretty good and they will come back and use it. So, we continue to see that growing,” Chairman and CEO Tom Ryan said in late October.

Meanwhile, Wal-Mart is relaunching its Great Value private brand, which includes 5,500 unique food and household items. It is improving the quality and value of the line and the rebranded products will arrive on its shelves in March.

Not to miss out, Target is increasing the presence of private brands in it stores and dedicating more space in its weekly circulars to them. And Rite Aid Corp is even launching its own line of suntan lotions, lip balm and other products called Rx Suncare, all priced under $10.