And Sam's Club has stepped up efforts to produce more private-label goods.

During that period, sales of private-label goods grew by 6 percent, nearly twice as quickly as those of the overall industry, the firm said.

A few makers of generic and private-label goods managed slight advances, while others were down only a bit.

But about 30 percent of Galeries private-label goods will be made by American suppliers, she said.

Federated has perhaps the most extensive lines of private-label goods.

Only the high margins provided by such private-label goods can pay the costs of marketing, warehousing and shipping.

And Federated/Allied will increase its use of private-label goods to 20 percent from 10 percent.

Manufacturers of brand-name products, in turn, are hedging their bets by making private-label goods.

A better control of expenses, improved quality in private-label goods and merchandising changes helped lift Mervyn's profits.

In addition, Fleming's increased heft should improve the company's purchasing power for brand-name and private-label goods.