Researchers have a good understanding, for instance, why store brands constitute 65 percent of sales of canned green beans but only 1 percent of deodorants. But until now, no research has considered variation across retailers in private label sales within a single category such as packaged pasta, a more relevant issue to national manufacturers interested in their own brands. Using regression-based analyses, they show that variation in store brand performance across retailers is directly related to important underlying strategies within these three variable groups. The extent to which the retailer serves a customer base containing less wealthy and more elderly households improves the performance of the store brand, and operating in less competitive markets also improves performance. In addition, retailer promotional support can significantly enhance private label performance.
Retailers often use national brands to draw customers to their stores.
Retailers who pursue this traffic-building strategy usually carry more national brands, deeper assortments, and offer lower everyday and promotional prices on national brands. Each of these actions works against the retailer's own brands, highlighting the important balancing act the retailer must perform to profitably manage the sales revenue and margin mix in each of its categories. At the same time, adding a higher quality premium store brand program may mitigate this trade-off. From the national brand's perspective, encouraging the retailer to carry more brands and deeper assortments may be the most effective way to keep store brands in check. The importance of these variables, however, may depend on the national brand's market position.