Effects of the Private‐Label Invasion in Food Industries

Abstract

Using supermarket scanner data, we test a variety of hypotheses from trade journals about the invasion of private‐label food products. According to conventional industry wisdom, name‐brand firms defended their brands against new private‐label products by lowering their prices, engaging in additional promotional activities, and increasingly differentiating their products. Our empirical evidence is inconsistent with these beliefs.

Keywords: private label, entry, price, promotional activity, differentiation, supermarket, L110, L660