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Private label share, branding strategy and store loyalty

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  • Ngobo, Paul-Valentin

Abstract

When retailers increase the share of private labels in their product assortment, how does this affect customer store loyalty? This is the main question we address in this article. We develop a model of the relationship between a store's private-label share relative to the market average (RPLS) and store loyalty, measured with the share of wallet (SOW). The model controls for the traditional drivers of consumer choice behavior such as the retailer's marketing mix efforts (price, feature advertising, and store location) and household demographics. We conduct our econometric analyses using data from a panel of 5196 households from 23 stores of different chains in France over five years and a half (2004–2009). We adopt a factor analytic model which accounts for both household- and store-specific differences. The results indicate that effects of private label share on store loyalty depend upon (i) the household's private label usage, (ii) the store private label branding strategy, and (iii) how private label share is measured (e.g. private label share vs. relative private label share).

Suggested Citation

  • Ngobo, Paul-Valentin, 2011. "Private label share, branding strategy and store loyalty," Journal of Retailing and Consumer Services, Elsevier, vol. 18(4), pages 259-270.
    • Handle: RePEc:eee:joreco:v:18:y:2011:i:4:p:259-270
    DOI: 10.1016/j.jretconser.2010.11.007
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    References listed on IDEAS

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    1. Sanjay K. Dhar & Stephen J. Hoch, 1997. "Why Store Brand Penetration Varies by Retailer," Marketing Science, INFORMS, vol. 16(3), pages 208-227.
    2. Karsten Hansen & Vishal Singh & Pradeep Chintagunta, 2006. "Understanding Store-Brand Purchase Behavior Across Categories," Marketing Science, INFORMS, vol. 25(1), pages 75-90, 01-02.
    3. Birger Wernerfelt, 1988. "Umbrella Branding as a Signal of New Product Quality: An Example of Signalling by Posting a Bond," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 458-466, Autumn.
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    Citations

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    1. Gázquez-Abad, Juan Carlos & Martínez-López, Francisco J. & Esteban-Millat, Irene, 2017. "The role of consumers' attitude towards economic climate in their reaction to ‘PL-only’ assortments: Evidence from the United States and Spain," Journal of Retailing and Consumer Services, Elsevier, vol. 34(C), pages 340-348.
    2. Zaffou, Madiha & Campbell, Benjamin & Rabinowitz, Adam, 2016. "Spillover Effect of Participation in Women, Infant and Children (WIC) Program on Consumer’s Purchasing Behavior of Private Label Goods," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230100, Southern Agricultural Economics Association.
    3. Marques, Catarina & da Silva, Rui Vinhas & Davcik, Nebojsa S. & Faria, Rita Tamagnini, 2020. "The role of brand equity in a new rebranding strategy of a private label brand," Journal of Business Research, Elsevier, vol. 117(C), pages 497-507.
    4. Ngobo, Paul-Valentin & Jean, Sylvie, 2012. "Does store image influence demand for organic store brands?," Journal of Retailing and Consumer Services, Elsevier, vol. 19(6), pages 621-628.
    5. Fornari, Edoardo & Fornari, Daniele & Grandi, Sebastiano & Menegatti, Mario, 2013. "The influence of retailing-mix levers on private label market share: The case of the Italian FMCG market," Journal of Retailing and Consumer Services, Elsevier, vol. 20(6), pages 617-624.
    6. Kaswengi, Joseph & Diallo, Mbaye Fall, 2015. "Consumer choice of store brands across store formats: A panel data analysis under crisis periods," Journal of Retailing and Consumer Services, Elsevier, vol. 23(C), pages 70-76.
    7. Magali Jara & Jean-Marc Ferrandi, 2017. "Standard retail brand equity: antecedents and sustainable developments," Working Papers hal-01465177, HAL.
    8. Gázquez-Abad, Juan Carlos & Martínez-López, Francisco J. & Sethuraman, Raj, 2021. "What factors moderate the effect of assortment reduction on store switching? Insights and implications for grocery brands," Journal of Business Research, Elsevier, vol. 133(C), pages 98-115.
    9. María Pilar Martínez-Ruiz & Juán José Blázquez-Resino & Giovanni Pino, 2017. "Store attributes leading customer satisfaction with unplanned purchases," The Service Industries Journal, Taylor & Francis Journals, vol. 37(5-6), pages 277-295, April.
    10. Hanna Górska-Warsewicz & Sylwia Żakowska-Biemans & Maksymilian Czeczotko & Monika Świątkowska & Dagmara Stangierska & Ewa Świstak & Agnieszka Bobola & Julita Szlachciuk & Karol Krajewski, 2018. "Organic Private Labels as Sources of Competitive Advantage—The Case of International Retailers Operating on the Polish Market," Sustainability, MDPI, vol. 10(7), pages 1-28, July.

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