Customer attitudes to private labels: the role of store image

Private labels have become a major force in the global grocery market yet their market penetration varies between countries, retailers and product categories. Researchers have investigated consumer, retailer and market factors in a bid to identify and explain the determinants of private label success. While retailer differentiation has been recognised for some time as a key motivation for private labels, the link between retail image and private labels is currently receiving greater attention with the rise of the concept of retailer as brand. This concept is associated with major grocery retailers in developed European markets moving to enhance their overall image by coordinating all aspects of their operations, including their private labels. Although the wider store image literature suggests that store image and brand image are interdependent, only more recently has there been research of the role of store image in attitudes to private labels. This research addresses the gap in the literature by replicating and extending Collins-Dodd & Lindley’s (2003) (CDL) empirical study on the influence of store image on the perceptions of specific private labels. The New Zealand market context for the research allowed the relationship to be examined at two retail chain stores, both of which offered the same two private labels. The research confirms that store image is positively associated with attitudes to private labels, but finds that the nature of the store image determinants and their effect depend on both the retailer and the private label. Only weak support is found for CDL’s conclusion that attitudes to private labels are related to the unique positioning of stores. Rather, the quality of the store’s wider product assortment is the major determinant of attitude to private labels regardless of the store. These findings are at odds with the differentiation motive for private labels and point to the need for both practitioners and researchers to examine the ‘fit’ between store positioning and private label positioning. For retailers, the findings also highlight consumer reliance on extrinsic cues in the assessment of private label products, suggesting the need to reduce perceived private label risk. For researchers, the findings also suggest that store image should be incorporated in models predicting consumer proneness to private labels