A retailer's private-label portfolio: budget, standard and premium private labels.

One of the most salient changes in the grocery environment is the growing success of private labels (PLs) (i.e. all merchandise sold under a retailers brand). Sophisticated retailers nowadays are offering three tiers of PL products, ranging from cheap, low quality own labels (i.e. budget PLs) to somewhat less expensive, comparable quality PLs (i.e. standard PL s), to premium quality, high value added PLs that are not priced lower than national brands (NBs) (i.e. premium PLs). This project extends the academic field, which mainly regarded PLs as one homogeneous group, by offering better insights in the popular retailers three-tier PL programs. The first study provides a deeper understanding in which type of categories such three-tier strategy is called for. A second study explores how the popularity of each PL tier can be related to behavioral store loyalty, whereas the last two studies explore the competition between PLs across retailers as well the competition between PL tiers and NB tiers. The results allow us to answer the following questions: What is a retailers optimal number of PL tiers in a specific category? Which PL tier is more able to build store loyalty? How do PL tiers and NB tiers compete?

Keywords:Competition, National brands, Private labels, Retailing, Empirical Industrial Organization

Disciplines:Business administration and accounting, Management