Private-Labels and the Channel Relationship: A Cross-Category Analysis
Posted: 1 Oct 1998
Retailers introduce private-labels in a category not only to gain profits directly from the private-label but also to use as a strategic weapon to elicit concessions from the national brand manufacturers. We show that, in certain categories, the retailer can gain better terms of trade by introducing a private-label. The ability of the retailer to use the private-label for this purpose is hypothesized to be inversely related to the risks consumers associate with purchasing in that category. The implications of our model are supported by data from a cross-section of grocery categories.
JEL Classification: L81, L10
Suggested Citation: Suggested Citation