Article2011

The impact of private label brands on customer loyalty and product category profitability

Michael S. Pepe · Russell Abratt · Paul A. Dion

63 citations0/0 files storedJournal of Product & Brand Management

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Consumer Market Behavior and Pricing Consumer Behavior in Brand Consumption and Identification Consumer Retail Behavior Studies

Abstract

Purpose The purpose of this study is to investigate the influence of private label resources possessed by a supermarket retailer on the shopping behavior of loyal customers. The study examines whether or not private label products can help in the overall enhancement of product category performance. Design/methodology/approach The paper examines the performance of a supermarket retailer in the Northeast United States that operates over 100 stores and generates a total yearly sales volume in excess of $3 billion. Data obtained from the Supermarket's point of sale information were used. The paper then developed a research model from the literature review and used structural equation modeling to analyze the data. Findings The findings show that overall dollars spent by loyal customers significantly impacted overall profitability. Research limitations/implications The data collected pertained to the supermarket's grocery department that is comprised of center store dry grocery products, frozen food products, and refrigerated dairy products. Perishable departments such as deli, seafood, meat, bakery, floral, general merchandise, health and beauty care, etc. were not researched in this study. Also, data obtained were from one individual supermarket chain. Practical implications Although private label products may represent increased profitability for retailers, consumers prefer a full assortment of merchandise; an over emphasis on private label brands may result in diminishing category performance. Originality/value The paper examines the performance of a supermarket retailer in the Northeast United States that operates over 100 stores and generates a total yearly sales volume in excess of $3 billion. The use of scanner data has value as it measures actual shopping behavior.

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References

1994The Commitment-Trust Theory of Relationship Marketing 1996Toward a knowledge‐based theory of the firm 1994Customer Loyalty: Toward an Integrated Conceptual Framework 1995Relationship Marketing in Consumer Markets: Antecedents and Consequences 1978Brand Loyalty: Measurement and Management 2001The Loyalty Effect 1996PUBLICATION RECORDS AND TENURE DECISIONS IN THE FIELD OF STRATEGIC MANAGEMENT 2004Understanding retail branding: conceptual insights and research priorities

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