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The Impact of Private Label Introduction on Assortment, Prices, and Profits of Retailers

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  • Meilin MA
  • Ralph Bernd Siebert

Abstract

We study how introducing private‐label brands (PLs) affects retail prices and profits, accounting for assortment adjustments of national brands (NBs). We employ an event‐study framework and scanner data on the US beef market. When a PL is added to the low‐priced market segment, we find that retail stores further differentiate NBs from the PL and remove same‐segment NBs. When a PL is added to the high‐priced segment, however, NB assortment changes are limited. PL introduction and PL‐driven NB assortment changes impose small price effects on NB, but strongly cannibalize NB demand and steer consumers toward PLs, likely increasing store profits.

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  • Meilin MA & Ralph Bernd Siebert, 2024. "The Impact of Private Label Introduction on Assortment, Prices, and Profits of Retailers," Journal of Industrial Economics, Wiley Blackwell, vol. 72(1), pages 356-389, March.
    • Handle: RePEc:bla:jindec:v:72:y:2024:i:1:p:356-389
    DOI: 10.1111/joie.12359
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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