Income inequality and consumer preference for private labels versus national brands

Income inequality is a growing social issue in the United States, yet little research has examined whether and how it affects consumers’ everyday purchasing decisions. To address this gap, we analyze the role of income inequality in shopper behavior, namely grocery shoppers’ preference for private labels versus national brands. Since income inequality increases people’s interest in brands that are associated with higher status than others, we predict that shoppers facing higher inequality have a stronger preference for national brands rather than private labels. The results support our thesis: Americans living in places with high versus low income inequality include fewer private label items in their shopping baskets and are willing to pay a higher premium for national brands. Further, consistent with social comparison theory, we find that the link between income inequality and preference for private labels versus national brands is stronger when people have higher social comparison orientation.