How effective are private label programs in the retail grocery sector ?

Abstract

Nowadays, consumers are increasingly familiar with the concept of private labels. This is due to their growing presence in everyday life. In the retail grocery sector, it is hard to find a retailer that is not offering private labels as part of its product assortment. Moreover, throughout the years, retailers have devoted considerable efforts to improve them. Through this study, we wanted to understand why so much efforts have been put in the development of private labels. We wanted to grasp the motivations that drive retailers to detain private labels in their product portfolio and therefore what makes a private label program effective from a retailer's point of view. In order to understand what motivates retailers, we delved into the literature. We started with defining the context in which private labels that interest us evolve: the retail grocery sector. Then, we focused on private labels. Our literature review provided us with an improved understanding of their features, their evolution, the differences in private label share per product category and more importantly, retailers' motivations for developing them. We conducted a qualitative research among employees from Carrefour Belgium in order to get answers to our questions. Our research enabled us to highlight the advantages that a private label program offers to retailers. It also provided us with the main challenges that retailers may face when having private labels in their product portfolio. Finally, we discovered the measures and tools that are used to assess the effectiveness of private labels.