Online from: 1989
Subject Area: Marketing
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|Title:||Intra-category competition, entry probability, and private label share: Evidence from organic food retailing in Australia|
|Author(s):||Lay Peng Tan, (Department of Marketing and Management, Macquarie University, North Ryde, Australia), Jack Cadeaux, (School of Marketing, University of New South Wales, Sydney, Australia)|
|Citation:||Lay Peng Tan, Jack Cadeaux, (2012) "Intra-category competition, entry probability, and private label share: Evidence from organic food retailing in Australia", Asia Pacific Journal of Marketing and Logistics, Vol. 24 Iss: 3, pp.414 - 432|
|Keywords:||Australia, Entry probability, Inter-format competition, Intra-category, Organic foods, Organic retailing, Private label, Retailing|
|Article type:||Research paper|
|DOI:||10.1108/13555851211237894 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||The authors are grateful for the constructive and valuable comments they received from the reviewers. They also wish to thank the anonymous retailer which provided the data for this study.|
Purpose – The purpose of this study is to examine the entry probability and performance of private labels at an organic food retailer. For a growing sector with unique market structure and category characteristics, it examines how competitive factors affect the attractiveness of a product category for private label entry by an organic food retailer and how the manufacturer brand assortment that the retailer stocks affects private label share.
Design/methodology/approach – This study analyses store level cross-category data from an independent organic retailer and field data on retail competition.
Findings – The findings show that organic private label stock-keeping units are more likely to be present in categories with supermarket competition. They also show that concentration of shares amongst manufacturer brands (as measured by the Herfindahl index) negatively affect the probability that the retailer will enter a category with a private label stock-keeping unit (SKU) but positively affects the share of that private label SKU.
Research limitations/implications – Although the results arise from a fairly small sample of around 30 categories, the focal retailer offers a unique opportunity to examine several private label decisions at the store level. Future work could examine in greater depth the competitive interaction between supermarkets and organic retailers and the effects of such competition on their assortment decisions.
Originality/value – By extending private label research beyond the conventional supermarket industry, this study conducts a pioneering test of the effects of competition between retail formats on the likelihood of private label entry.
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