Private label share, branding strategy and store loyalty

When retailers increase the share of private labels in their product assortment, how does this affect customer store loyalty? This is the main question we address in this article. We develop a model of the relationship between a store's private-label share relative to the market average (RPLS) and store loyalty, measured with the share of wallet (SOW). The model controls for the traditional drivers of consumer choice behavior such as the retailer's marketing mix efforts (price, feature advertising, and store location) and household demographics. We conduct our econometric analyses using data from a panel of 5196 households from 23 stores of different chains in France over five years and a half (2004–2009). We adopt a factor analytic model which accounts for both household- and store-specific differences. The results indicate that effects of private label share on store loyalty depend upon (i) the household's private label usage, (ii) the store private label branding strategy, and (iii) how private label share is measured (e.g. private label share vs. relative private label share).