Proliferation of Private Labels in Food Retailing : A Literature Overview

This article provides an overview of private-label research by focusing on the food retailing sector. To explain the proliferation of private labels, we identify key drivers by reviewing the determinants discussed in prior literature. This article identifies the conditions that support the proliferation of private labels—retailer concentration and retailer pricing autonomy—and describes the nature of competition between private labels and national brands. It also highlights the drivers of private-label purchases by providing an overview of brand-related determinants, price and risk-related determinants, quality aspects, sociodemographics, and consumer purchasing behavior. The article concludes by proposing three areas for future private-label research.


Introduction
In recent decades, we have seen a proliferation of private label use in food retailing.Intense price competition at the retail level has driven corporate concentration, and company mergers and acquisitions have given retailers the freedom to expand the scope of their brands (Olbrich, Jansen, & Hundt, in press).Private label use is rooted in the discount retail category; its growth corresponds to the strong growth of discounters.In this competitive environment, food retailers (including supermarkets and hypermarkets) have responded by developing their own private labels (Cuneo, Milberg, Benavente, & Palacios-Fenech, 2015).Private labels now target not only lower and middle price segments (generic and classic private labels) but also upper price segments (premium private labels) (Jonas & Roosen, 2005;Ter Braak, Geyskens, & Dekimpe, 2014;Schnittka, 2015).Competitive pressures significantly increase the spread of private labels (Olbrich & Hundt, in press).This article provides an overview of selected topics in private-label research.First, we update and extend previous literature reviews (e.g., Hyman, Kopf, & Lee, 2010;Manikandan, 2012) by integrating new findings and developing a structure for private-label research.We identify two basic conditions that support the proliferation of private labels: concentration at the retail level and retailers' pricing autonomy.We examine the competition between private labels and national brands, accelerated by retailers.Second, we highlight the drivers of private-label sales by discussing brand-related determinants, price-and risk-related determinants, sociodemographics, consumers' purchasing behavior, and quality aspects.Third, to encourage research scholars, we identify three areas in which further research is needed.
By offering private labels, retailers seek to increase their margins and improve their store images, as perceived by targeted consumers (Olbrich & Jansen, 2014).A successful image can help attract new consumers and create store loyalty (Bhatt & Bhatt, 2014).Both price and uniqueness of product range are important factors in building image.Private labels improve the power of retailers in relation to the branded goods industry and strengthen their negotiating positions (Olbrich & Buhr, 2005a;Olbrich & Grewe, 2009;Olbrich & Grewe, 2013).In the past, retailers were simply the purchasers and distributors of goods.Today, they are also the owners and marketers of their own private labels and sometimes even run the production process.As a result, they have become competitors to their business partners, the branded goods industry-referred to as the "double-agent" approach (Olbrich & Buhr, 2005b;Timmor, 2007).Because retail shelf space is limited and fully controlled by retailers, their power as "gatekeepers" is significant (Nordås, 2008).In response to the proliferation of private labels, some retailers have threatened to temporarily or permanently delist national brands, even though such a tactic conflicts with the manufacturers' objective of ensuring ubiquitous availability for their national brands (Olbrich, Grewe, & Orenstrat, 2009).But from the perspective of retailers, delisting of national brands creates the space they need to introduce private labels.These developments-including the possible tactical mistakes of individual manufacturers of national brands-have removed the stigma consumers previously associated with the purchase of private labels.The penetration of a wide assortment of private labels at various price and quality levels, along with active promotion by retailers, has prompted consumers increasingly to make purchase decisions in favor of private labels (Olbrich & Hundt, in press).Data from METRO AG (2015) (Figure 1) provides an overview of market shares of private labels in the grocery retail (excluding fresh produce) for selected European nations.We see a low degree of private label use in Italy, but in Switzerland, almost half of total turnover is based on private labels.Accordingly, there is a risk that private-label products may crowd out some national brands as retailers, recognizing that consumers favor low prices, adopt aggressive pricing behaviors.To explain the proliferation of private labels, we identify key drivers by reviewing the determinants discussed in prior literature.

Concentration at the Retail Level
As a sign of the significant concentration at the retail level, we point to the consolidation of revenues to a few large retailers.For selected European nations, Figure 2 shows-on the basis of data of the Private Label Manufacturers Association (PLMA) and Planet Retail-the market share of private labels and the market share of the three top-selling retail companies (Dawson, 2015).One of the main causes of private-label proliferation is the concentration of retail companies; private labels are successful only when a retailer reaches a certain size (Rubio & Yagüe, 2009).For the present data, the correlation coefficient between the market share of private labels and the market share of the three top-selling retail companies is .59.Such concentration processes, and the related growth of private labels, are supported in Europe by the freedom of retailers to set prices (Olbrich, Hundt, & Grewe, 2014).

Pricing Autonomy of Retailers
A key driver of cut-throat competition at the retail level is the European Union's prohibition on resale price maintenance (Olbrich & Buhr, 2004;Olbrich & Buhr, 2005a;Olbrich et al., 2014).In accordance with Article 101, Paragraph 1 of the Treaty on the Functioning of the European Union (TFEU), with a few specific exceptions (European Commission, 2010), the branded goods industry is prohibited from contractually binding consumer prices, according to a fixed or minimum price.The industry can only set the prices at which it sells products to a retailer.The retailer may set the consumer prices of both national brands and its own private labels, according to its considerations and objectives ("freedom in pricing").This resulting pricing autonomy is a form of support for retailers' private labels.Consequently, retailer promotion of private labels creates the risk of national brand erosion.

Competition between National Brands and Private Labels
The current pricing autonomy of retailers allows them to use certain pricing tactics (Olbrich et al., 2014), and national brands are sometimes sold with aggressive price campaigns (Olbrich & Grewe, 2013).Special price offers from retailers undermine national brand price positioning and contribute systematically to the erosion of consumers' willingness to pay for national brands.Retailers divert consumers to their stores by offering "door-buster" discount prices for well-known national brands.The brands lose their elevated position with consumers, and private labels gain market share.A further action at the retail level is in the use of national brands in an "umbrella pricing" context (Olbrich & Grewe, 2013).To increase private-label sales, retailers frequently use national brands as reference products to help consumers assess private-label prices.They price national brands significantly higher to make private labels appear cheaper and more attractive.To further the effect, they display the lower prices of private labels on shelves and in brochures, where private-label products look similar to corresponding national brands (Olbrich & Grewe, 2013;Orenstrat, 2014).This approach lowers national brand loyalty, reduces consumers' willingness to pay for national brands, and leads to a shift in demand (Hundt, 2014;Olbrich & Hundt, in press).In Figure 3, we present a framework of actions retailers take to support private labels by influencing consumer perceptions and reactions.When price gaps between national brands and private labels are advertised, consumers notice the price advantage of private labels.However, the perception of a price difference usually is not sufficient to initiate a shift in demand.From the retailers' perspective, communication of comparable quality also is important to achieve an adequate price-performance ratio for private labels (Hundt, 2014).The positioning of private labels close to leading national brands helps signal similar quality and benefits.Then by directly highlighting price differences ("comparable quality at lower prices"), retailers can further shift demand from national brands and increase consumer loyalty to private labels (Anselmsson & Johansson, 2009).Some empirical findings suggest the intention to purchase private labels is influenced more by perceived quality than by the perceived price-performance ratio (value for money) (Richardson, Dick, & Jain, 1994).Therefore, retailers position their private labels close to leading national brands.A corresponding design of marketing tools (e.g., package designs, advertising campaigns, tasting, price campaigns) can support this strategy.
As presented in the framework (Figure 3), competition between national brands and private labels is not limited to price.As private labels take on increasing roles in building the retailer's image, competition extends to product quality (Foscht & Brandstaetter, 2014).By offering passable quality at low prices, retailers increase private-label purchases but also improve their positions in competition with other private-label retailers (Olbrich & Jansen, 2014;Olbrich et al., in press;Olbrich, Jansen, & Teller, 2016).In the context of this competitive framework, private labels and national brands eventually equilibrate in consumers' perceptions.Steenkamp, Van Heerde, & Geyskens (2010) show that perceptions of qualitative differences between national brands and private labels and willingness to pay more for national brands are strongly influenced by packaging design.As national brands and private labels equilibrate in consumers' perceptions, the concept of "stimulus generalization" becomes relevant (Kapferer, 1995(Kapferer, , 1995;;Till & Priluck, 2000;Walsh & Mitchell, 2005).Consumers note the advantage of national brands only when national brands have distinctive packaging and are clearly distinguished from private labels.When the packaging design of private labels closely resembles that of leading national brands, packaging similarities may cause confusion (Rafiq & Collins, 1996), and packaging is no longer a unique selling point.National brand owners must continuously make substantial investments to distinguish themselves from imitating private labels (Quelch & Harding, 1996;Aribarg, Arora, Henderson, & Kim, 2014).When consumers believe private labels are produced by leading national brand owners, they perceive less difference in quality between national brands and private labels (Coelho do Vale & Verga Matos, 2015).
The risk of loss of the qualitative superiority of a national brand also depends on its life cycle (Steenkamp et al., 2010).Although private labels are already in the mature phase of their life cycle in some nations, in others they are still in the development phase (Figure 1).Perceived quality differences between national brands and private labels are lower in the maturing phase than the development phase.As the life cycle of private labels proceeds, with new publications of test results, consumer articles, and personal testimonies, the perceived quality of private labels and national brands becomes equivalent and price-quality associations are undermined.Steenkamp et al. (2010) further conclude that consumers are willing to pay less for national brands, if private labels are in the mature phase of their life cycle and in widespread use.

Brand-Related Determinants
The extent to which overarching brand awareness by consumers acts on the purchase of private labels is uncertain.Intuitively, less brand-conscious consumers likely use a more-price/less-quality approach during their purchases.This conclusion reflects the results of early studies that show that in the absence of direct product experience, higher-priced national brands are perceived as having higher quality than private labels.Therefore, buying low-priced, unknown brands in large quantities represents higher perceived risk for some consumers (e.g., Fowler, 1982).Early authors explained that consumers with positive attitudes toward private labels were less likely to perceive brand names as meaningful quality indicators (Dick, Jain, & Richardson, 1996).Brand awareness and brand affinity thus hinder the purchase of private labels and have a positive impact on the purchase of national brands.
Yet Walsh & Mitchell (2010) argue that brand awareness no longer acts as a barrier to the purchase of private labels, perhaps because consumers do not perceive the purchase of private labels as stigmatizing.Using survey data, they support their hypothesis that there is no connection between brand awareness and private-label purchase intention, such that "Being brand conscious may no longer be incompatible with buying PLB [private label brands]" (p.16).Nevertheless, the authors concede brand awareness may have a positive influence on purchases of private labels in the premium segment and hinder the purchase of private labels with weak brand image in that segment.They do not differentiate various segments of private labels, so the effects of these different marketing strategies may cancel each other.However, the overall assumption that national brands guarantee better quality compared with non-labeled products or private labels is eroding over time.Therefore, we anticipate further declines in the importance of traditional brand awareness.In several product categories, empirical analysis confirms that an increasing price gap between national brands and private labels is connected with increased market share for private labels (Méndez, Oubiña, & Rubio, 2008).We expect this increase to be greater in product categories characterized by less product differentiation.
All in all, empirical research indicates a weakening of the importance of brand awareness, at least for everyday consumer goods (Olbrich et al., 2014).Walsh & Mitchell (2010) even find-to their surprise-that attitudes toward private labels do not affect purchase intention.To explain such a lack of correlation between attitude and behavior, they suggest that "as the reputation and quality has increased, they [private label brands] are now no longer regarded as a separate category and are judged on their own merits vis à vis other branded products in the product category, thus a separate attitude toward them has diminished in explanatory power" (p.16).

Price-and Risk-Related Determinants
With regard to brand-related determinants, Erdem, Zhao, & Valenzuela (2004) find that differences in quality between national brands and private labels are perceived to a greater extent in the United States than in Europe.European consumers tend to be more sensitive to price than quality and less risk-averse than consumers in the United States.The risk perceptions of consumers seem to (indirectly) determine the success of private labels (Kakkos, Trivellas, & Sdrolias, 2015).Hsu & Lai (2008) find that consumers are willing to purchase private labels to a greater extent when they are price-conscious and perceive lower risks of buying errors.This "bad buy" risk may be less pronounced when consumers perceive the search characteristics of products more than experience characteristics: There is a positive correlation between price consciousness and perceptions of search characteristics.Lin, Marshall, & Dawson (2009) show that as familiarity with private labels increases, both price consciousness and the perceived quality of the private labels rise, but the risk associated with private labels decreases.Although the former effect positively influences attitudes toward private labels, the latter represents a negative influence.More positive attitudes toward private labels lead to stronger purchase intentions.This relationship framework suggests that price consciousness and perceived risk have only slight effects on attitudes, whereas perceived quality and (indirectly) familiarity with private labels have the greatest influences.Richardson, Jain, & Dick (1996) support the relationship between the perceived quality of national brands and private labels and the perceived price-performance ratio (value for money) of private labels.If consumers perceive fewer qualitative differences between national brands and private labels, they judge the price-performance ratio of private labels more positively and perceive a lower quality risk.Perceived quality risk also decreases as familiarity with private labels increases.If well-known national brand names are used as quality indicators though, major differences between national brands and private labels are associated with higher perceived quality risk for private labels.Sinha & Batra (1999) reveal how price consciousness explains the purchases of private labels: As price consciousness increases, the purchase of private labels becomes more frequent.However, they also note that price consciousness is less developed in product categories where perceived risk is classified as high.When consumers perceive the price of national brands to be unfair, price consciousness rises (for similar results, see Batra & Sinha, 2000).
With regard to foods that must comply with minimum quality standards, consumers likely judge the functional risks of national brands and private labels to be equal.Intuitively, it can be assumed the psychological risks that result from the social environment are more likely to be associated with private labels (Zielke & Dobbelstein, 2007).However, private labels are purchased by all types of consumers, resulting in similar risks for national brands and private labels.We expect economic risks to have a relatively low impact for cheap private labels.In food retailing in particular, the risks perceived by consumers-especially in the case of dominant search characteristics-should be significantly lower; even a mispurchase, driven by price, does not lead to serious consequences (i.e., tangible financial losses).Regarding the ranges of national brands and private labels, consumers thus are largely indifferent.Research shows private labels are largely accepted as substitutes for national brands, though national brands are rejected as substitutes for private labels (Jin, Jones, Chen, & Sam, 2010).Consumers no longer see private-label products as second choices.
As a result of this quality alignment between national brands and private labels, price becomes increasingly important in purchase decisions.Price consciousness is simply "the degree to which the consumer focuses exclusively on paying low prices" (Lichtenstein, Ridgway, & Netemeyer, 1993, p. 235).If consumers see no serious differences in quality between brand types, both the pursuit of quality and the pursuit of low prices are satisfied.Some studies confirm that though buyers of private labels are sensitive to price, they also perceive relatively high quality for the products.Empirical studies also show that compared with buyers of national brands, buyers of private labels have lower brand awareness; both groups perceive the importance of brand choice similarly (Goldsmith, Flynn, Goldsmith, & Stacey, 2010).Price orientation (price consciousness) positively influences consumers' purchasing decisions with regard to private labels (Baltas, 1997;Batra & Sinha, 2000;Hsu & Lai, 2008).Zielke & Dobbelstein (2007) find some evidence of the effect of price gaps between national brands and private labels and the effect of price savings on intentions to purchase private labels.Walsh & Mitchell (2010) show a positive effect of price on intentions to purchase.Anselmsson & Johansson (2009) find a weakly positive influence of price consciousness on the expressed purchase intention of private labels, corresponding to a lower willingness to pay.Thus, affordability and the price-performance ratio are the main reasons that consumers choose private labels.They choose national brands on the basis of advantages such as appearance, degree of innovation, and image (Omar, 1996).Nevertheless, the perceived consumer benefits of national brands seem to erode with the proliferation of private labels.The weakening of the perceived purchase risk (associated with private labels) in connection with the price orientation of consumers strengthens further growth of private labels.

Quality Aspects of Private Labels
Bellizzi, Krueckeberg, Hamilton, & Martin (1981) were the first to study quality perceptions of private labels in comparison with national brands.Their results revealed lower ratings for private labels compared with national brands on quality, appearance, and attractiveness.In line with these findings, Omar (1994) conducted a blind taste test and observed that consumers did not perceive any difference among private labels and national brands.Hoch & Banerji (1993) found that with regard to consumer decisions to buy private labels or national brands, perceived quality was more important than discounted price.When prices were equal, consumers tended to buy national brands instead of private labels (Narasimhan & Wilcox, 1998), indicating that they perceived a quality difference between the two types, with national brands perceived to be higher in quality.
More recently, Nenycz-Thiel & Romaniuk (2009) find that consumers' perceptual categorization of private labels and national brands differs once private labels have been purchased.Consumers of private-label brands do not see them as any less trustworthy than national brands.However, non-users of private labels use trust to discriminate between the brand types and rely on negative attribute information to categorize the brands.Regardless of experience, private labels form a subgroup in consumers' memories, with low price and low quality as the main drivers of this categorization.Corstjens & Lal (2000) divide retail consumers into two segments.The first segment consists of quality-oriented consumers, who benefit from perceived quality.The second segment consists of consumers who are interested in low prices.The authors propose that by projecting store brands into the quality-conscious segment, retailers can avoid brand switching by consumers.
With a regression-based analysis, DelVecchio (2001) investigates the influence of product category characteristics on consumers' perceptions of private-label quality.The results indicate that these perceptions are driven by complexity, price level, average interpurchase time, and quality variance in the product category.Although consumers' uses of brand names as functional cues are unrelated to assessments of private-label quality, consumers who consider brands to be symbolic resources (surprisingly) view private-label brands more favorably.However, the positive perception of private-label quality among consumers who view brands as symbolic resources is limited to product categories that are private in nature.Choi & Coughlan (2006) investigate the retailer's problem of positioning private labels against two national brands in terms of both product quality and product features.Using a demand function derived from consumer utility, they show that the best positioning strategy depends on the quality of the retailer's own products and the nature of the national brand competition.When the national brands are differentiated, a high-quality private label should position closer to a stronger national brand, and a low-quality private label should position closer to a weaker national brand.When the national brands are undifferentiated, the private label should be distinct from both national brands.
In their empirical study, Vahie & Paswan (2006) focus on the relationship between perceived private-label brand image and perceived retail store image, as well as the feelings associated with the presence of a national brand.Their results indicate that store atmosphere and store quality positively influence perceptions of a private label's image, whereas the congruence between national brand and store image has a negative influence on perceptions of the private label's quality.In comparison, store quality, store convenience, store price/value, and the congruence between national brand and private label image have a positive influence on the affective dimension of the private-label image, whereas the congruence between national brand and store image has a negative influence.Olbrich & Jansen (2014) show high price-quality correlations for national brands and non-food private labels that indicate higher price signals greater product quality.For food product private labels, negative correlation coefficients inhibit the use of price as a quality indicator.The price-quality relationship for food product private labels implies strong competition among brand owners, based on the price and quality of their products.Studies by Jansen, Olbrich, & Teller (2014) and Olbrich et al. (2016) consider whether and how poor test ratings induce anti-consumption behaviors, out of fear of poor product performance.The authors find that the market shares of national brands and private labels decline significantly after the publication of poor test ratings, suggesting high customer churn.The use of price promotions for national brands also declines, leading to an increase in average prices paid.However, for private labels, poor test ratings only slightly affect the use of price promotions and prices paid.
Summing up, we assume that the positioning of private labels close to leading national brands helps retailers to signal similar quality.Retail companies have already managed to establish private labels in different price and quality segments, and this leads to an erosion of perceived quality differences between both brand types-although significant differences may exist.

Sociodemographics
In general, scientific discussion of the influence of sociodemographic characteristics on the purchase of private labels shows strong doubt about such effects.This finding is independent of whether the actual or expressed purchases of private labels or merely proneness toward private labels were the study variables.
Although many studies investigate the sociodemographic characteristics of private-label buyers, they have not been able to create unique consumer profiles (Burt & Davies, 2010).Bergès, Hassan, Monier-Dilhan, & Raynal (2009) reaffirm, in their study based on scanning data, that there is no real influence of sociodemographics on purchasing behavior.Sociodemographic characteristics are therefore not able to explain consumers' choices between national brands and private labels (Cataluña, García, & Phau, 2006).Using past research results for both for sociodemographic and psychographic characteristics, Fennell, Allenby, Yang, & Edwards (2003) conclude: "Since the early seventies, it has been known that the relationship between demographic and general psychographic variables and product use is present but not strong.The search for correlates for relative brand preference (e.g., using scanner data) has been less successful, with results suggesting that demographic and general psychographic variables are generally not predictive of brand use" (p.241).
As early as 1960, Munn concluded sociodemographic characteristics such as age, income, and educations were not likely to explain perceptions of brands and their quality differences.A relatively early study by Frank & Boyd (1965), based on consumer panel data, found that the purchase of private labels was connected to certain significant sociodemographic factors, though the effects were weak.These authors even concluded that national brands and private labels competed on a level playing field, because both brand types appealed to households with comparable, or even identical, sociodemographic characteristics.Burger & Schott (1972) published a similar finding: "Demographic variables were absent, indicating that the private brand buyers were spread across all socioeconomic groups" (p.221).
The blurring of sociodemographic characteristics associated with private-label and national-brand buyers is the result of an environment in which private labels are available in a wide range of product categories and versions and actively promoted by retailers.Private labels are no longer regarded as niche products, making it difficult to generalize about the sociodemographic characteristics of private-label buyers (Goldsmith et al., 2010).Nevertheless, references to moderate influences of sociodemographics on private-label consumption can be found.For example, several investigations confirm the suspected impact of sociodemographics on preference for private labels: "Store brand buyers tend to have lower middle to middle income levels, be younger, married, and have larger families" (Dick, Jain, & Richardson, 1995, pp. 19-20).In the Turkish market, characterized by a relatively small distribution of private labels, Dolekoglu, Albayrak, Kara, & Keskin (2008) also find sociodemographic impacts.Younger consumers tend to be willing to pay a premium for known national brands, but older consumers do not, due to financial restrictions.Consequently, lower incomes have a positive effect on the willingness to buy private labels.The authors cannot confirm a significant effect of household size, but they show descriptively that with decreasing household size, preference for national brands increases.Kuhar & Tič (2008) find similar results.They reveal that households with low incomes, and both small and large-sized households, indicate a higher purchase frequency for private labels.Richardson et al. (1996) showed that consumers with higher incomes were less likely to buy private labels.However, household size had a positive influence on the tendency to buy private labels, such that large households, particularly in relation to restrictions on disposable income, were more likely to purchase private labels.In general, households with a lower income respond more to price elasticity (Huang, Jones, & Hahn, 2007).Jones & Mustiful (1996) concluded that low-income consumers behave rationally, showing a higher price consciousness.Consumers with lower incomes seemed to perceive similar quality properties for national brands and private labels or regard price savings as compensation for lower quality.The idea that consumers with lower incomes practice risk-averse behavior by avoiding less-known brands was not confirmed.Furthermore, Akbay & Jones (2005) find that "lower-income consumers have higher preferences for the lower-priced private label brands" (p.628).However, this result is questionable, given the study's lack of representativeness (six supermarkets) and dated data (June 1998-September 1999 database).
By contrast, Herstein & Vilnai-Yavetz (2007) find that consumers with high incomes and low incomes regard price as less important.Consumers with average incomes consider price relevant to their purchase decisions.This finding illustrates that the effect of income does not follow a linear relationship and suggests the influences of different income levels may cancel each other out in the context of consumers' decisions about brand types.Regardless of income, consumers must make trade-offs between price and product quality (Sinha & Batra, 1999).Burt & Davies (2010) find that in addition to the lack of importance of sociodemographic characteristics, there is even less importance of lifestyle and values when segmenting consumers: "It is now accepted that that [sic] a wide range of customers with different demographic socio-economic, lifestyle, and value profiles purchase private brand products" (p.866).
Although sociodemographic characteristics do not appear to explain purchasing behavior directly, they may have an indirect effect through psychographics.Ailawadi, Neslin, & Gedenk (2001) analyze this indirect effect: "Demographics influence these behaviors not only directly but also indirectly through their effect on psychographics.The motivation for considering this indirect effect is that neither deal proneness nor store brand proneness research has had much success in obtaining consistent and strong associations with demographics" (p.73).The authors suggest this finding can be used to segment households and design communication policies that are appropriate for target groups.They point out that sociodemographic characteristics have a significant effect on psychographics.Nevertheless, it is doubtful that sociodemographics have a strong influence on real purchasing behavior (Olbrich et al., 2014).

Purchasing Behavior: A Detailed View
To study purchasing behavior, e.g., Blattberg & Wisniewski (1989) have performed analyses based on scanning and household panels.This kind of research addresses potential differences among expressed attitudes, intentions, and real purchasing behavior (Belk, 1985), and therefore must be considered separately.Olbrich, Grewe, & Battenfeld (2006) show that for discounters, sales increase as listings of private labels increase.However, if more than 30 percent of all listed articles are private labels, sales decrease.The authors suggest this is the result of retailers removing national brands from their assortment to list more private labels.In supermarkets and hypermarkets, the authors find that as the share of private labels increase, sales decline; they recommend supermarket and hypermarket managers add-but not substitute-private labels.In this context, Olbrich, Schäfer, & Battenfeld (2006) confirm the erosion of national brands due to private labels.The authors ascribe this erosion to retailers' use of umbrella-pricing tactics.Furthermore, they state that private labels are substituted for national brands more frequently by discounters and hypermarkets than by supermarkets.Olbrich & Grewe (2009) and Olbrich et al. (2009) analyze the consequences of competition between national brands and private labels.The empirical results indicate evidence, for all store types, of decreasing product variety and increasing prices over time.The results also show that turnover in supermarkets, especially in hypermarkets, declines.A positive turnover trend can be found only in discount stores.Olbrich & Grewe (2013) analyze how retailer assortment and pricing policy promotions, designed to increase sales of private labels, affect the level of category performance.The findings, based on point-of-sale scanning data from the German grocery sector, are surprising: Extending the range of private labels and reducing that of national brands does not lead to greater category performance.Olbrich et al. (2014) propose and test a comprehensive structural equation model that primarily addresses consumer willingness to pay (WTP) in food retailing.The authors use multifaceted household panel data to simultaneously estimate relationships among sociodemographics, psychographics, and actual purchasing behavior.These results show that consumers of private labels have a comparatively low WTP, and their purchases can be attributed to their price consciousness and discount orientation.The authors also find that brand consciousness has no significant effect on private-label purchases.
With regard to similarity of private labels to corresponding national brands, Orenstrat (2014) develops a similarity scale that covers various dimensions.According to actual purchasing behavior, brand imitations with a moderate similarity to their corresponding national brands contribute most to an increase in the market share of private labels at the household level.Thus, the success of brand imitation by retailers is not necessarily connected to high similarity to corresponding national brands.Hundt, Jansen, & Olbrich (2017) investigate the movement of customer demand across private labels and national brands according to a gain-and-loss analysis.Therefore, they differentiate among price tiers: low-, middle-, and high-price segments.The strongest competition between national brands and private labels takes place in the low-price segment.It leads to a noticeable loss of national brands in the low-price segment, such that national brands lose significant sales to private labels, and suggests that consumers perceive these offerings as increasingly interchangeable.
Such studies based on actual purchasing behavior support other research approaches by achieving a high external validity and representativeness of the results.

Further Research
Although private labels have received scholarly attention, more research is required.There are three areas in which we encourage research scholars to perform further analyses of private labels and their effects on consumers, retailers, and manufacturers.
First, previous studies have often been based on expressed attitudes, opinions, and intentions.Additional research should rely more on real behavior, which can be observed through scanning and household panel data.Researchers must also take the discrepancy between stated attitudes and actual purchasing behavior into consideration.Furthermore, additional research should investigate the acceptance of private labels in terms of longitudinal analyses.Against the background of comparative advertising, researchers would benefit from examining the perceived difference between national brands and private labels from a consumer's point of view.
Second, current studies have been limited to certain countries.Further studies should take other nations into consideration to analyze cross-cultural differences.Countries in which private-label use is less advanced are of special interest.In those contexts, longitudinal analyses would be welcome.Additional research should also investigate various forms of retailer pricing autonomy and retailer power.Furthermore, different conditions of competition might be a relevant determinant of private label proliferation.
Third, most existing studies tend to differentiate only between private labels and national brands.But private labels are diverse; they range from entry-level private labels to premium private labels.Researchers should treat this diversity as a variable in further studies.In terms of retail branding, it would be interesting to measure the effect of a private label brand on the retailers' brand.With regard to pricing, researchers should empirically investigate price gaps between national brands and private labels.In this context, different pricing strategies that incorporate competition-based pricing are of particular interest.Accordingly, analyses of other marketing techniques like secondary placements and the use of promotions would benefit from differentiating between national brands and private labels.

Figure 2 .
Figure 2. Country comparison of market share of private labels and market share of the top 3 retailers (in 2014)

Figure 3 .
Figure 3. Framework for supporting private labels