Correlates of store brand proneness: some empirical observations
| Published date | 01 October 1995 |
| Pages | 15-22 |
| DOI | https://doi.org/10.1108/10610429510097663 |
| Date | 01 October 1995 |
| Author | Alan Dick,Arun Jain,Paul Richardson |
| Subject Matter | Marketing |
JOURNAL OF PRODUCT & BRAND MANAGEMENT VOL. 4 NO. 4 1995 pp. 15-22 © MCB UNIVERSITY PRESS 1061-0421 15
Introduction
Store brand grocery items enjoy enormous popularity in Europe. In the UK,
for example, the volume market share of store brand packaged goods
exceeds 35% of total sales. In fact, store brands marketed by Sainsbury, the
largest chain in the UK, account for over 60% of volume sales (The
Economist, 1995). Private label brands are also well entrenched in other
countries. In Spain, DIA’s private label brands comprise 50% of this chain’s
annual turnover. Likewise, in France the giant chain Carrefour has become
the industry leader through the strength of its products libre line of private
label brands.
Given the penetration of store brands in Europe, one would expect similar
successes to be found in the USA. However, this is not the case. For the
past decade, store brands have enjoyed only modest success in the USA,
accounting for a paltry 13% of market share. While significant gains in store
brand performance have occurred in the 1990s (they now account for 19% of
market share in the USA), they still trail their European counterparts by a
wide margin (The Economist, 1995).
The relatively poor performance of store brands in the US is surprising given
the potential of these products to impact favorably on retailer profitability.
Our extensive but informal discussions with supermarket executives reveal
that margins are substantially greater for store brands than for national
brands.
In Britain, the success of store brands has helped retailers achieve profit
margins close to 8% compared with the typical 1-2% reported in the USA
(Economist, 1995). Moreover, store brands enable chains to expand into
lower volume categories for which success depends on comparative gross
profit contributions. More importantly, store brands may potentially increase
customer traffic and generate greater store loyalty by virtue of the fact that
such brands are available only at the sponsoring store. Thus, if effectively
marketed, store brands may greatly assist retailers in gaining a unique
competitive position in the market (Richardson et al., 1994).
Given the strategic importance and potential of store brands, it would appear
that it is in management’s best interest to understand distinguishing
characteristics of the store brand buyer. An accurate profile of the store
brand-prone consumer may assist retailers in improving the position of store
brands in the market and offer insights into why these products have fared
relatively poorly in the past. Towards this, we report empirical findings
concerning characteristics of the “store brand prone” consumer. Specifically,
we seek to assess the degree to which heavy and light users of store brands
differ in terms of demographic, socio-economic, and attitudinal variables.
We hope that our findings may provide some impetus for managerial action
to strengthen the position of store brands in the market.
Correlates of store brand
proneness: some empirical
observations
Alan Dick, Arun Jain and Paul Richardson
Poor performance of
store brands
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