Another factor: Low-to-zero marketing costs for the generics allow for more aggressive pricing.

Some of the Archer Farms foods at Target are quite good - I tried their spinach and garlic sausages a few weeks ago, and they were delicious, and about half the price of national brands such as Aidells. They also make a frozen breakfast bowl (eggs, sausage and cheese) that is perfect for me and others who would rather not have potatoes in the mixture (every other brand has tons of potatoes in the bowl).