Emerald Management Review:
Private-label use and store loyalty

Abstract:

Purpose - To examine the impact of private-label share (PLS) on customer loyalty

Design/methodology/approach - Draws on the literature in examining the claim that PL use encourages higher store loyalty among customers. Examines PL impact on share of wallet (SOW), share of items purchased, and share of shopping trips by a simultaneous econometric model that explores a household's share and loyalty regarding two Dutch retail chains: (AJ) Albert Heijn ('service chain' leader with high PLS), and C1000 ('value chain' leader with lower PLS). Employs panel data covering complete purchases (64 different product categories across 20 chains) and demographic and psychographic data. Applies two-stage least squares estimation. Investigates low, medium and high PLS consumers.

Findings - Tables derived coefficients for the stores' SOW and PLS logarithmic estimation equations, and their bivariate association relationships. Concludes, inter alia, that store loyalty and SOW significantly affects PL share for AJ - with both effects being strongly nonmonotonic (inverted U-shape). Finds, for C1000, that effects are also positive and non-linear - but not monotonic as PLS is not high enough. Observes a small store loyalty reverse PLS effect.

Research limitations/implications - Seeks further research to increase the model's explanatory power.

Practical implications - Declares PLS <=> SOW virtuous cycle peaks because substantial PL buyers are generically loyal to price savings and PLs rather than to any chain. Suggests retailers develop speciality PLs and markets PLs imaginatively.

Originality/value - Quantifies private-label effects on share of wallet and provides related managerial recommendations.

Keywords:

Article Type:

Research paper

Reference:

Top