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The Relationship Between National Brand and Private Label Food Products: Prices, Promotions, Recessions, and Recoveries

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  • Volpe, Richard

Abstract

Over the past two decades, private label food products have grown steadily in sales and often directly compete for market share with national brands. This competition lowers prices and increases product choices for consumers. This report analyzes the relationship between private label and national brand product prices and in-store promotions for two major U.S. grocery store chains during the 2007-2009 recession and the year following the recession (2010). Retailers promote private label products (offer price discounts) strategically in response to national brand pricing promotions to protect private label market share during national brand promotions. However, the extent of the retailer response varies widely across supermarket departments and is also affected by both the density of food stores and the market share of supercenters within a market area. These findings hold true regardless of the state of the economy, although the magnitude of the interaction between national brands and private labels differs in times of recession and recovery.

Suggested Citation

  • Volpe, Richard, 2011. "The Relationship Between National Brand and Private Label Food Products: Prices, Promotions, Recessions, and Recoveries," Economic Research Report 262234, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersrr:262234
    DOI: 10.22004/ag.econ.262234
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    References listed on IDEAS

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    1. Richard J. Volpe & Nathalie Lavoie, 2008. "The Effect of Wal-Mart Supercenters on Grocery Prices in New England," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(1), pages 4-26.
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    Cited by:

    1. Johnson, Rutherford Cd., 2016. "A Probabilistic Demand Application In The American Cracker Market," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 4(3), pages 1-13, July.
    2. Ellen J. Van Loo & Fien Minnens & Wim Verbeke, 2021. "Consumer Preferences for Private Label Brand vs. National Brand Organic Juice and Eggs: A Latent Class Approach," Sustainability, MDPI, vol. 13(13), pages 1-12, June.
    3. Barnes, Ryan N. & Bosworth, Ryan C. & Bailey, DeeVon & Curtis, Kynda R., 2014. "Connecting Sensory Quality Characteristics and Local Designations to Willingness to Pay for Cheese at the Retail Level," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 17(3), pages 1-24, September.
    4. Li, Xun & Wang, Rui & Lopez, Rigoberto A., 2016. "Energy Shock and Price Adjustment: National Brands vs. Private Labels of Retail Milk Products," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235613, Agricultural and Applied Economics Association.
    5. Gázquez-Abad, Juan Carlos & Martínez-López, Francisco J. & Esteban-Millat, Irene, 2017. "The role of consumers' attitude towards economic climate in their reaction to ‘PL-only’ assortments: Evidence from the United States and Spain," Journal of Retailing and Consumer Services, Elsevier, vol. 34(C), pages 340-348.
    6. Volpe III, Rickard James, 2014. "National Brands, Private Labels, and Food Price Inflation," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 46(4), pages 1-16, November.
    7. Bodur, H. Onur & Tofighi, Maryam & Grohmann, Bianca, 2016. "When Should Private Label Brands Endorse Ethical Attributes?," Journal of Retailing, Elsevier, vol. 92(2), pages 204-217.
    8. Jon Steinman, 2020. "Consumer Food Co‐ops in the Age of Grocery Giants," American Journal of Economics and Sociology, Wiley Blackwell, vol. 79(3), pages 833-875, May.
    9. Pritha Ghosh & Subrata Saha & Shamindra Nath Sanyal & Swati Mukherjee, 2021. "Positioning of private label brands of men’s apparel against national brands," Journal of Marketing Analytics, Palgrave Macmillan, vol. 9(3), pages 210-227, September.

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    Demand and Price Analysis; Marketing;

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