Relationship Between Store Loyalty And Store Positioning

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Mark Lett (2011) 22:297–313 DOI 10.1007/s11002-010-9126-x

Store brand and store loyalty: The moderating role of store brand positioning
Mercedes Martos-Partal & Óscar González-Benito

Published online: 2 October 2010 # Springer Science+Business Media, LLC 2010

Abstract Despite extensive research, the relationship between store brand loyalty and store loyalty remains uncertain. Recent research suggest a nonmonotonic relationship between store brand loyalty and store loyalty: positive up to a certain store brand loyalty level, after which it becomes negative (inverted U). However, existing arguments suggest this relationship may relate to the competitive positioning of store brands, especially their price–quality positioning. The more quality-oriented the store brand positioning, the more favorable the effect of store brand loyalty appears to be on store loyalty. An empirical study, focused on retailers that simultaneously offer several store brands with different price–quality positions, corroborates this proposition. The store brand loyalty level at which store brand loyalty induces a negative effect on store loyalty occurs earlier when the store brand positioning stresses price instead of quality. Keywords Store brand . Generic brand . Brand loyalty . Store loyalty . Store brand positioning A trend characterizing the retail industry in recent years has been the fast growth of store brands, especially among non-durable consumer goods. According to the Private Label Manufacturers Association (PLMA 2009), Europe leads the international scene in terms of market share; in Spain for example, the market share of private-label brands reached 34% in 2008. North America also has experienced significant growth, though it remains far below the European level. Store brands account for one of every five items sold in US supermarkets, drug chains, and mass merchandisers, which equals more than $65 billion in sales, and further increases are
M. Martos-Partal (*) : Ó. González-Benito Dpto. de Administración y Economía de la Empresa, Campus Miguel de Unamuno, Universidad de Salamanca, 37007 Salamanca, Spain e-mail: Ó. González-Benito e-mail:


Mark Lett (2011) 22:297–313

expected in coming years. Not only are consumers more prone to buy store brands during economic downturns, but many of them, once they try a store brand, keep buying even when the bad economic times are over (Lamey et al. 2007). This competitive scenario accordingly has generated significant research interest (Sethuraman 2006). Early studies focused on the profile of store brand buyers, but the growing availability of panel and scanner data has enabled researchers to undertake more normative studies. A particularly important research line considers the determinants of store brands’ performance, compared with national brands’ performance (e.g., Bonfrer and Chintagunta 2004; Dhar and Hoch 1997; Hoch and Barneji 1993; Sethuraman 1995). The underlying intuition behind such research assumes that greater store brand share leads to better retailer performance, based largely on the store brand’s potential to improve retailer performance at a manufacturer’s expense. On the one hand, the profit margins for store brands generally are higher than those for national brands. Ailawadi and Harlam (2004) corroborate this assertion, though they also find that the per unit net median profits are not necessarily higher, because store brands charge lower prices than do manufacturer brands. Therefore, retailers’ efforts to shift demand for manufacturer brands into demand for store brands may not lead to greater profitability in the product category. On the other hand, store brands may enhance the bargaining power of retailers and enable them to obtain better contract conditions with suppliers; some studies offer empirical support for this assertion (Ailawadi and Harlam 2004; Mills 1995; Narasimhan and Wilcox 1998). A complementary research