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The resistible rise of private labels

Author

Listed:
  • Michel Dietsch

    (LARGE - Laboratoire de recherche en gestion et économie - Université Louis Pasteur - Strasbourg I - Université Robert Schuman - Strasbourg III)

  • Sylvain Willart

    (LARGE - Laboratoire de recherche en gestion et économie - Université Louis Pasteur - Strasbourg I - Université Robert Schuman - Strasbourg III)

Abstract

This paper is argues that increasing the number of private labels products in grocery stores is not always an efficient strategy for a retailer wishing to enhance her unit sales. Although private labels can be effective for providing higher margins or developing customer loyalty program, their increased number of Stock Keeping Unit (SKU) assumes item deletions for other types of brand - especially national brands. For this study, we choose to focus on the composition of the whole brand assortment rather than the competitive advantage of this or that brand type. This paper proposes an econometric approach to this assortment reshaping issue. Using data drawn from a retailer panel (provided by IRI Inc), we construct a Multiple Adaptive Regression Spline (MARS) model to investigate the relation between both private label's and national brand's SKU and store-level unit sales. Results are given with respect to store size. We find that only in biggest stores higher levels of private labels leads to enhanced sales.

Suggested Citation

  • Michel Dietsch & Sylvain Willart, 2009. "The resistible rise of private labels," Working Papers halshs-00784013, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00784013
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00784013
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