Competition between Private Labels and National Brands in a Multichannel Retailer

This chapter analyzes private label and national brand competition across online and offline channels. We analyze competition using three measures: market share, a loyalty index, and what is called in the literature conquesting power (a measure of the ability of a brand to capture nonloyal consumers). We first provide a brief theoretical introduction and literature research about the topic. We also do an empirical analysis using data of a multichannel grocery retailer that sells both its own private label and national brands, through physical stores and an online store. The data include the purchases made by a sample of multichannel consumers. We find that the private label increases, in general, its competitive position in the online channel, compared to the offline channel. However, this result does not hold for all the product categories. We discuss some drivers of this general improvement, as well as potential causes for the differences between categories. We conclude with some recommendations for multichannel retailers and manufacturers.