The Impact of National Brand Introductions on Hard-Discounter Image and Share-of-Wallet

Lourenço, C.J.S., Gijsbrechts, E. (2013), "The Impact of National Brand Introductions on Hard Discounter Image and Share-of-Wallet," International Journal of Research in Marketing, 30(4), 368-382.

55 Pages Posted: 16 Apr 2013 Last revised: 30 Oct 2014

See all articles by Carlos Lourenço

Carlos Lourenço

Economics Department - ISEG - Lisbon University; SOCIUS - ISEG - Lisbon University; Netspar - Network for Research on Pensions, Aging, and Retirement

Els Gijsbrechts

Tilburg University - Center for Economic Research (CentER)

Date Written: April 15, 2013

Abstract

Hard-discounters (HDs) such as Aldi and Lidl are increasingly introducing national brands (NBs) into their private label (PL) dominated assortments. While there is evidence that this enhances sales in the categories where such NBs are added, little is known about how it affects consumers’ overall perceptions of the HD and consequently its share of the customers’ wallet. Using a unique data set that combines longitudinal information on a HD’s perceptions, with that chain’s assortment composition, we investigate the impact of NB introductions on the chain’s overall value and assortment image, and spending share.

We show that introductions of NBs, in particular category leaders, may significantly contribute to a more favorable perception of the HD store. For positive value-image effects to materialize, HDs must offer these NBs at low-enough prices to maintain a reasonable price gap with the current private label offer. For the NB entry to enhance the HD’s assortment perception, it must come with a sufficiently deep product line.

However, there are limits to this approach. Introductions gradually lose effect as the share of NBs at the HD goes up. More importantly, ill-selected NB additions may backfire on the HD. Listing NBs that are not category-leaders, at prices too far above its private labels, deteriorates the HD’s favorable value positioning – cutting into its core competitive advantage, and leading to notable reductions in share-of-wallet. We discuss the academic and managerial implications of these findings.

Keywords: Store Image, Consumer Perceptions, National Brands, Hard-Discounters, Share-of-wallet

Suggested Citation

Lourenço, Carlos and Gijsbrechts, Els, The Impact of National Brand Introductions on Hard-Discounter Image and Share-of-Wallet (April 15, 2013). Lourenço, C.J.S., Gijsbrechts, E. (2013), "The Impact of National Brand Introductions on Hard Discounter Image and Share-of-Wallet," International Journal of Research in Marketing, 30(4), 368-382.. Available at SSRN: https://ssrn.com/abstract=2251207

Carlos Lourenço (Contact Author)

Economics Department - ISEG - Lisbon University ( email )

R. Miguel Lupi, 20
Lisbon, 1248-078
Portugal

SOCIUS - ISEG - Lisbon University ( email )

Rua Miguel Lupi, 20
Lisboa, 1249- 078
Portugal

Netspar - Network for Research on Pensions, Aging, and Retirement ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Els Gijsbrechts

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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