The impact of private labels on consumer store loyalty: An integrative perspective

doi:10.1016/j.jretconser.2015.10.003

Journal of Retailing and Consumer Services

Volume 28, January 2016, Pages 179-188

https://doi.org/10.1016/j.jretconser.2015.10.003 Get rights and content

Highlights

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This research studies the role of private labels on consumers’ store loyalty.
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It offers an integrative approach that comprises several store loyalty drivers.
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Structural Equation Modeling was used and run across different retail formats.
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Factors that contribute to loyalty depend on retailers‘ market positioning.
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The impact of PLs is mostly significant for medium-cost and premium supermarkets.

Abstract

This research studies the role of private labels (PLs) on consumers’ store loyalty. It offers an integrative approach that comprises several store loyalty drivers (in-store and economic factors), analyzing the role that PLs play among different types of retailers. Data were collected through an online survey. Using structural equation modeling, we run our analysis across different retail formats, assessing which factors lead to store loyalty and to what extent PLs contribute to it. Findings suggest that depending on retailers‘ market positioning, different factors contribute to loyalty and that the impact of PLs is mostly significant for medium-cost and premium supermarkets.

Introduction

Private labels (PLs) have been gaining increasing importance throughout the world (Sethuraman and Gielens, 2014) with store brands being present in almost every product category (Geyskens et al., 2010, Nielsen, 2014). Some of the advantages referred to explain this phenomenon is that private labels offer retailers a mechanism to reach differentiation in the consumers’ market by providing a set of distinctive products to its customers (Sayman et al., 2002), as well as to help retailers strengthen consumer loyalty (Ailawadi et al., 2008; Corjstens and Lal, 2000). However, despite all the previous research on this topic, the relationship between private labels and store loyalty is still quite uncertain (Martos-Partal and Gonzaléz-Benito, 2011; Seenivasan et al., 2015) and can be quite complex (Koschate-Fischer et al., 2014).

In the present research we aim to address this gap, following an integrative approach to determine the level of importance of private labels loyalty on store brands loyalty. We include in our model not only the consumers’ loyalty towards the private labels, but also control for other factors that can significantly influence consumers’ store loyalty and that are not so commonly analyzed: a variety of in-store driven factors (e.g., stores’ convenience, and stores’ appearance, Maruyama and Wu, 2014), as also several economic factors (e.g., store pricing policy and store loyalty programs; Bridson et al., 2008). Moreover, because each retailer can invest in specific differentiating factors, we run our analysis across different types of retailers, following a classification that combines both pricing policies as well as levels of services offered (Low-cost: EDLP strategy, minimum level of services-; Medium-cost: hi-low pricing strategy, medium level of services; and Premium: high pricing policy, high level of services), in order to assess which factors lead to store loyalty and to what extent PLs contribute to them. To the best of our knowledge, no previous studies adopted before such an integrative perspective when analyzing the impact of PLs on consumers store loyalty.

Section snippets

Store loyalty

Regarding the conceptualization of store loyalty, there is no universal agreement on its definition (Blut et al., 2007, Kumar and Shah, 2004), with customer loyalty remaining a topic of great interest for companies (Martos-Partal and González-Benito, 2013). While some authors propose it can be measured focusing on consumers‘ intentions to continue purchasing (Meyer-Waarden, 2015, Sirohi et al., 1998), others suggest it can also be measured focusing on consumers’ behavioral characteristics as

Conceptual framework and hypotheses

In order to assess the impact of private labels on consumer store loyalty we opted for an integrated approach where multiple other factors are included and controlled for (in-store and economic factors). This approach offers an overall perspective of store-loyalty driving factors, simultaneously assessing the relevance of private labels on store loyalty (See complete model in Fig. 1).

As described previously, different factors related to the store's physical characteristics can play an important

Data and sample

Data was collected through an online survey in Portugal (available upon request), where the retailing market is moderately concentrated and where PLs market share represent about 33% (Nielsen, 2014). 1403 participants opened the link, 824 started the survey, and 560 completed it (response rate of 67.96%). Out the completed surveys, only 469 participants reported to be the household member who had primary responsibility for grocery shopping, constituting the final sample of analysis (M_age=42,

Statistical analysis and results

We ran separately the measurement models for each of our latent variables within each relevant construct (in-store characteristics, economic drivers, private label loyalty factors and store loyalty measure). We then solved the measurement models simultaneously for the sets of items representing each construct. The standardized results are presented in Table 2, Table 3, Table 4, Table 5. Using the threshold of ±0.5 to identify significant loadings, we identified that all but four items from the

Discussion and future research

Despite the notorious increase in penetration of private labels throughout the majority of markets and retailers, with few exceptions, little extant research has focused on analyzing its influence to store loyalty. We contribute to this body of knowledge offering an integrative framework of analysis, which besides encompassing a construct that assesses consumers loyalty towards the private labels offered by retailers, also includes in one single model all the main loyalty-driving factors

Acknowledgments

The authors acknowledge financial support from the Fundação para a Ciência and Tecnologia (FCT Portugal) through the Multi-Year Funding Program for R&D Units (UID/SOC/04521/2013 and UID/GES/00407/2013) and the project PTDC/EGE-GES/103899/2008. The third author was partially supported by the project CEMAPRE – MULTI/00491 financed by FCT/MEC through national funds and when applicable co-financed by FEDER, under the Partnership Agreement PT2020. We thank the support from the research assistants

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