How important are private labels for consumers in grocery retailing?

Abstract

The grocery market has three large umbrella chains where they use different approaches to differentiate themselves. One approach is their use of private labels. When the private labels were introduced into the market, they were cheap and the quality were poor. Today, it is more focus of creating products that are superior in quality but at lower or at same price as the manufacturers’ brands. These products are called premium and they are innovative and unique.

This research focuses on how important the private labels are for the consumers. More specifically, how the private labels create brand loyalty and if the consumers prefer a private label rather than a manufacturer brand. It was conducted three analyses, descriptives, multiple regression (ordinal least square) and logistic regression. In multiple regression, brand loyalty got tested. The findings illustrated that price, product accessibility and perceived taste have a positive effect. The control variable, gender, has also a significant effect. In logistic regression, the variable that got tested was the consumers preference of a private label rather than a manufacturer brand. The findings showed that price has a positive effect. The control variables, brand comparison, beverages, household size and annual household gross income also have a significant effect.

It was also conducted interviews, where seven respondents participated in this study. The respondents contributed with information regarding private labels, the grocery market and branding.