No abstract

The authors show how new realities in the private-label (PL) landscape, including differential PL-sourcing relationships and differentiated, three-tiered PL portfolios, affect the gross margins that retailers realize on their PLs. In addition, they examine the moderating role of the identity of the PL supplier (dual brander vs. dedicated supplier). Retailer PL margins are lower for stockkeeping units from PL suppliers with whom the retailer shares a more intense relationship, as reflected in their relationship breadth and depth, but this negative effect can be countered through multisourcing. Building prolonged relationships with PL suppliers also results in lower retailer PL margins, but only for more national brand-oriented suppliers. Dedicated PL suppliers have little to gain by building long-term retailer relationships, but they are less vulnerable to the retailer's practice of multisourcing than dual branders. Although economy PLs may appeal to conventional supermarkets to keep (hard) discounters at bay, they result in lower margins (percentage-wise and absolute) than the standard PLs they cannibalize. Premium PLs, in turn, offer the retailer a higher margin, but only when produced by suppliers with a sufficient extent of national brand focus. However, the higher promotional support often given to premium PLs tends to mitigate the actual margin advantage.

Discounters have a private-label dominated assortment where national brands have only limited shelf access. These limited spots are in high demand with national-brand manufacturers.We examine whether private-label production by leading national-brand manufacturers for two important discounters (one hard and one soft) creates discounter goodwill. We estimate a selection model on a sample of 450 manufacturer-category combinations from two leading discounters (Aldi in Germany and Mercadona in Spain), and show that private-label production is indeed rewarded: national-brand manufacturers involved in such practice have a higher likelihood of procuring shelf presence for their brands. Moreover, while powerful manufacturers are intrinsically more likely to obtain shelf presence with soft discounters, manufacturers with lower power can compensate this by producing private labels. No such dependence on power exists for the hard discounter.However, not all national-brand manufacturers are equally likely to produce private labels for discounters. We find that national-brand manufacturers are less likely to do so when they experience more sales growth, when it is more difficult to produce high-quality products in the category, when they invest more advertising support into their brands, and when they introduce more innovations. Moreover, a higher price differential relative to the discounter's private labels makes national-brand manufacturers less likely to engage in private-label production for hard discounters.

Using data from a large-scale field study, we show that (perceptions of) crowding change(s) the composition of a consumer's shopping basket. Specifically, as shoppers experience more crowding, their shopping basket contains (a) relatively more affect-rich ("hedonic") products, and (b) relatively more national brands. We offer a plausible dualprocess explanation for this phenomenon: Crowding induced distraction limits cognitive capacity, increasing the relative impact of affective responses in purchase decisions. As we are the first to show that level of crowding relates to what shoppers buy (at both product and brand level), the implications of these effects for retailers are discussed.

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Manufacturers increasingly adopt health symbols, which translate overall product healthiness into a single symbol, to communicate about the overall healthiness of their grocery products. This study examines how the performance implications of adding a front-of-pack health symbol to a product vary across products. We study the sales impact of a government-supported health symbol program in 29 packaged categories, using over four years of scanner data. The results indicate that health symbols are most impactful when they positively disconfirm pre-existing beliefs that a product is not among the healthiest products within the category. More specifically, we find that health symbols are more effective for (i) products with a front-of-pack taste claim, (ii) lower priced products, and (iii) private label products. Furthermore, these results are more pronounced in healthier categories than in unhealthier categories. Our findings imply that health symbols can help overcome lay beliefs among consumers regarding a product’s overall healthiness. As such, adding a health symbol provides easy-to-process information about product healthiness for the consumer and can increase product sales for the manufacturer.