This research extends findings on the retail brand equity in measuring the impact of its antecedents on the loyalty to the brand and to the store. This article raises questions about the sustainable created value by standard retail brands mostly oriented to functional components. The retail branding policy and store formats moderate results. This research adopts a PLS-Path modeling to test the retail brand equity model and its variations and then to provide a synthetic calculation of the retail brand equity. Results show that the standard retail brand equity leads to the loyalty to the brand and to the store. It varies according to: 1) the store brand policy (store’s own-named) appears to be a winning option maximizing the loyalty; 2) the “popular store” format—combining supermarket and department store—reinforces the sustainable relationship with customers because of the high level of service. By calculating scores, Carrefour brand maximizes the relationships within the model. This work focuses on French standard retail brands excluding other retail brands (such as generics or premium). Results also focus on one product category. The retailer’s positioning variable extends previous contributions leading to more consistent results. This research is also focused on the antecedents of retail brand equity too less studied: Benefits (received from their consumption) and the packaging of the branded product are thus integrated. Hence, perspectives for practitioners are suggested.
In 1996, Quelch and Harding [
Retail brands are, however, the strategic tools of the food retailers. Since the Carrefour “Free Products” in 1976, several generations of retail brands have emerged [
Actually, retail brands belong exclusively to retailers. As a consequence, if retailers clearly control the axes of communication on their brands, those could represent a powerful source of long-term value for customers. This value can only be achieved if retail brands are also, differentiated from other competing brands, involving, a high level of perceived quality ( [
This “value-oriented” development of retail brands enables them to ultimately construct their brand equity and to endow with it a unique position in consumers’ mind. It is becoming relevant to anchor this research within the retail brand equity theoretical framework. However, research conducted on it [
Brand equity concept emerged in the early 1980s. Farquhar (1989) [
Thus, if retail brands support the brand equity concept, they could potentially produce positive consequences on the customer’s loyalty (to the brand and the store). This causal relationship has been suggested by several previous contributions. Binninger (2007) [
Our research forms part of the theoretical retail brand equity framework, better suited to current managerial questions. It addresses those strategic and tactical questions and expands the previous contributions dedicated to the retail brand equity. More precisely, three objectives lead this research: 1) To test the impact of retail brand equity antecedents (in taking into account all associations related to the branded product and to store service) on the loyalty to the retail brand and to the store; 2) To moderate results by taking into account the retail branding policy (store brand - store’s own-named brands - store-banner brand like Carrefour brand from Carrefour, Monoprix brand from Monoprix vs. flagship retail brands―named differently from retailer but recognized as a retail brand like “Marque Repère” brand from E.Leclerc) and the retailer’s positioning through the store format (hypermarkets vs. the “popular store”―supermarket and department store combined, similar to a mini American Target Store). Our paper is in line with Keller and his colleagues’ work (2016) [
Actually, this research taking place in a French context, it becomes relevant and original to consider all various retailers’ strategies towards their retail brands and their stores. Hence, the third objective is to calculate the retail brand equity for each retailer through a synthetic rate leading to appreciate the specific retail brand performance.
This paper is structured as follows. Firstly, it begins by synthetically describing the theoretical framework of the retail brand equity and exposes hypotheses. Secondly, it details the research design. Hence, results emerging from the structural model are moderated by the retail branding policy and the store format. Finally, contributions and limits are discussed leading to managerial and tactical implications.
Previously, research on retail brands had particularly focused on the study of their image. The price image was a historical variable of the retail brand positioning [
In line with previous research in retailing, retail brands could be considered as a service brand meaning it is a final extension of the retailer [
Previous research (see
References | Consumers’ behaviors towards private labels |
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Category criteria Buy retail brands when: | |
Batra and Sinha (2000) [ | Functional product |
Batra and Sinha (2000) [ | Perceived quality doesn’t vary between national brands and private labels. |
Batra and Sinha (2000) [ | Perceived risk is low. Functional risk is related to the retailer’s know-how in that psychological risk is both related to the consequences of making a mistake and social image of the consumer as well as financial risk. |
according to the product category. Based on those numerous research, it emphasizes that consumers are likely to buy a retail brand when:
・ the product is functional;
・ the perceived risk is low;
・ the competing brands are homogeneous in terms of perceived quality.
Furthermore, the retail brand policy also seems to be a moderating variable of the brand performance. Consumers accept higher prices for retail brands if they are signed with the retailer’s name (namely store brand or stores’ own-named or store-banner brand) and if it is not a me-too product of the leading brand (with similar packaging for instance). Few retail brands have equal rates of re-purchase or better rates than national [
To our knowledge, only one research, has taken into account the role played by the store format in the created value of store brands [
According to the theoretical background, brand equity is defined by two components: the brand image (composed by strong, positive, unique and consistent associations) and the awareness [
According to Jacoby and Kyner, (1973) [
Given this, it is useful to test the brand equity and specifically to test its ability to retain: 1) to the retail brand; 2) to the store. Our theoretical model includes the significant dimensions measured in previous research relating to the retail brand equity and the store loyalty [
This model includes:
・ Six independent latent variables―they are components of the retail brand equity: the packaging, the perceived price, the perceived quality, financial benefits, decision-making benefits and the store service. Those variables define the “value” perceived by consumers. They are both related to product items such as “low prices”, the perceived quality, the packaging and benefits from the consumption [
・ One dependent latent variable: the loyalty (to the retail brand and to the store).
Therefore, hypotheses are revealed:
H1. Associations related to the branded product and to store service form the retail brand equity and influence positively the loyalty to the retail brand and to the store; More precisely,
H1a. Packaging forms the retail brand equity and influences positively the loyalty to the retail brand and to the store;
H1b. Perceived price forms the retail brand equity and influences positively
the loyalty to the retail brand and to the store;
H1c. Perceived quality forms the retail brand equity and influences positively the loyalty to the retail brand and to the store;
H1d. Financial benefits form the retail brand equity and influence positively the loyalty to the retail brand and to the store;
H1e. Decision-making benefits form the retail brand equity and influence positively the loyalty to the retail brand and to the store;
H1f. Store service forms the retail brand equity and influences positively the loyalty to the retail brand and to the store.
This model could be moderated by the retail branding policy and the retailer’s positioning (through his store format). Hence,
H2. The retail brand equity is moderated both by the retail brand policy and the store format.
H3. The retail brand equity is maximized by the store brand policy (cumulating larger associations from the branded product and from the store) and the hypermarket format (its good value for money is in line with the original retail brands’ positioning).
Our research aims at testing the impact of the retail brand equity on the loyalty (to the brand and to the store) leading to:
・ select standard retail brands: their managerial issue is more important due to the current events, their sales volume (higher than premium retail brands) and their potential of differentiation is higher than generic/economic private labels.
・ measure the image of each retail brand (cognitive dimensions);
・ measure the service of each store (cognitive dimensions);
・ measure behavioral and emotional components of the loyalty to the retail brand by intentions to re-purchase and to the store and by the consumer’s feelings towards it.
Based on previous research, the retail brand builds its brand equity from associations of the branded product and those of the store. In addition, two criteria are used: 1) the first is related to the branded product: the retail branding policy; 2) the second is related to the store format (hypermarket vs. “popular store”).
Thus, three standard retail brands were considered: Carrefour brand (store brand sold in hypermarket), “Marque Repère” brand from E.Leclerc (flagship retail brand sold in supermarket and hypermarket E.Leclerc) and Monoprix brand (store brand sold in “popular store”).
The choice of those retail brands is also assessed under the principal component analysis shown in
benefits variables). The Varimax rotation ensures the independence of the components and their readability by clearly assigning variables to their component.
Based on this factorial plan, the interest of the selection emerged by revealing those objects from three different positions. The three projected retail brands occupy distinct positions according to their branding policy and their mix retailing. In fact, the positioning of the Carrefour brand and Marque Repère (Leclerc) are opposite on the axis “value for money” (Carrefour simultaneously delivering a higher level of perceived quality and financial benefits than the Marque Repère), while Monoprix negatively occupies only the “original retail brand assets” axis. It therefore does not reflect the perceived positioning of the original standard retail brands. However, the relevance of this choice will be appreciated in the comparison of following structural models. Those typologies also corroborate different mix-retailing of retailers (the assortment, the price policy, the communication and the store atmosphere) depending on if it involves a hypermarket or a “popular store”. Given this, the building of the brand equity and its effects on the loyalty should vary. The square cosines indicate the quality of the brands projections on axes (see appendix).
A single category of products is selected: self-service deli meats (ham, pâté…). This category bears some interest in this research because:
・ there are less perceived quality differences between national brands and retail brands (related to previous research on retail brand performance according to the product category);
・ those products represent frequent purchases, which reinforce the knowledge and familiarity of the respondent.
Familiar consumers of their retail brands and who are loyal to the store (owning the store loyalty card) were interviewed. Actually, this familiarity leads to verify the quality of responses and to ensure the internal validity (since these consumers are better able to assess the relevant object on a set of specific criteria) and it is a necessary prerequisite for measuring loyalty. The sample is finally purposely not segmented according to individual criteria because previous research dedicated to retail brands have shown no unanimity about the buyer profile: the majority does not identify a causal link between individual characteristics of consumers and the retail brand purchase, especially since the product category is based on a low involvement [
The theoretical model is tested by using a PLS-Path modeling. This model, developed by Wold (1982) [
・ simultaneously measure causal relationships within a structural model with a small sample (120 observations);
・ estimate behaviors;
・ include formative constructs in the model;
・ maximize the created value by acting on specific factors within the model.
Data were collected through a questionnaire (administered face-to-face). 120 familiar and loyal customers to the store (owners of the store loyalty card and making frequent purchases in the store―
Variables were measured by a Likert five-point scale and are detailed in
Number of respondents | |
---|---|
Carrefour customers buying the retail brand | 37 |
Leclerc customers who buying the retail brand | 42 |
Monoprix customers who buying the retail brand | 41 |
Total | 120 |
Latent variables | Observed variables (Likert scale from 1 to 5) |
---|---|
Perceived price | Adequate price, low price. |
Perceived quality | Good, high, good value for money. |
Packaging | Appealing, informative, practical. |
Financial benefits | “Thanks to the retail brand, I get a good deal’’; “Retail brands enable me to save money’’. |
Decision-making benefits | “Retail brands make it easier for me to choose”; “retail brands save me time because I know that this retail brand is middle range”. |
Store service | Cleanness and modernity of the store; retail brand visibility on shelves, Retail brand in-store visibility; rigor of merchandising; staff in contact (skills and availability). |
Loyalty (to the brand and store) | Intent to buy the retail brand; “I feel I am loyal to my store”. |
Confirmatory factor analyses build the seven latent variables of the model.
The Rho Dillon-Goldstein and the convergent validity of measures with their average variance extracted (>0.5) ensure the reliability of the scales (after the bootstrap procedure). Results are described in
The store service variable has been validated according to the Diamantopoulos and Winklhofer method (2001) [
1) An analysis of correlations and weight measurement items in the latent variable: at this stage, an item is deleted whenever there is a sign reversal between its weight and its correlation to the latent variable.
2) Study of collinearity between the items of measurement: the “excessive” correlation between the items is unwanted as it prevents legible reading of the influence of each on the latent variable.
3) The external validity of the index: this is to show that the measurement items and their respective correlations are built more solidly than another built model.
The observed variables of each latent variable are highly heterogeneous in their causes and reveal implicitly two multidimensional components. Weak statistical indicators such as Cronbach’s alpha (below 0.4 for both latent variables) confirm that those constructs cannot be one-dimensional.
Latent variables | D.G. Rho | Average of variance extracted |
---|---|---|
PACKAGING | 0.817 | 0.593 |
FINANCIAL BENEFITS | 0.950 | 0.905 |
DECISION-MAKING BENEFITS | 0.943 | 0.891 |
PERCEIVED PRICE | 0.822 | 0.692 |
PERCEIVED QUALITY | 0.902 | 0.751 |
LOYALTY | 0.760 | 0.593 |
GoF | GoF (Bootstrap) | R2 - F (15,289) Pr > F: 0.000 |
---|---|---|
Absolute = 0.516 | 0.544 | 0.510 (R2 bootstrap) |
Relative = 0.905 | 0.875 | |
External model = 0.985 | 0.973 | |
Internal model = 0.919 | 0.899 |
Bootstrap―500 re-sampling.
of the loyalty to retail brands and store.
All statistic indicators show that constructs and relationships within them are validated.
The retail brand equity model is at first validated. Moderators (retail brand policy and store format) precise then those results for each retail brand.
1) A positive store service: 29.8% of created loyalty;
2) A level of perceived quality: 26%;
3) Financial benefits: 15.8%;
4) An appealing, informative and practical packaging: 8.1%;
5) A short decision-making process: 5.5%;
6) An adequate level of prices: 2.6%.
Those statistic validations confirm that the standard retail brand equity exists. In other words, retail brand equity antecedents (packaging, perceived price, perceived quality, financial benefits, decision-making benefits and store service) influence positively the loyalty to the retail brand and to the store. H1a, H1b, H1c, H1d, H1e and H1f are supported. Note that store service and the perceived quality are the two key factors of the created value to customers. Clearly customers emphasize functional components.
By testing three distinct models incorporating two criteria of variation (the retail brand policy and the store format), more accurate results emerge. In fact, for each of the three retail brands, the sustainable relationship with the consumer is built through different levers in accordance with the marketing policy of its brand.
Based on
Retail brands are service brands. The store service builds the brand equity of the three studied retail brands. Systematically, the value created by retail brands depends on the store service. The latter variable is considerable and decisive in the case of the “popular store” (53.7% of the loyalty is explained by store service). This is not surprising because of the high level of service offered in this
PERCEIVED QUALITY | STORE SERVICE | PACKAGING | FINANCIAL BENEFITS | DECISION-MAKING BENEFITS | PERCEIVED PRICE | |
---|---|---|---|---|---|---|
Path coefficient | 0.260 | 0.298 | 0.081 | 0.158 | 0.055 | 0.026 |
CARREFOUR | MARQUE REPERE | MONOPRIX | |
---|---|---|---|
R2 (Bootstrap―500) | 0.768 | 0.711 | 0.772 |
Average of variance extracted | 0.581 | 0.606 | 0.502 |
Goodness of Fit after bootstrap (absolute and relative) | 0.655 and 0.839 | 0.638 and 0.811 | 0.612 and 0.802 |
Components increasing loyalty―key factors of the created value | 1) Store service 2) Perceived price 3) Perceived quality 4) Financial benefits | 1) Store service 2) Decision-making benefits 3) Financial benefits 4) Perceived price | 1) Store service 2) Financial benefits 3) Decision-making benefits 4) Packaging |
Carrefour model Loyalty rate = 4.32/5 (obtained by Likert scale means on each construct) | 44.7% store service % + 26.2% perceived price + 13.4% perceived quality + 12.7% financial benefits + 4.4% decision-making benefits + 2.3% packaging. | ||
Marque Repère model Loyalty rate = 3.18/5 (obtained by Likert scale means on each construct) | 41% store service + 39.3% decision-making benefits + 12.5% financial benefits + 11.5% perceived price − 7.1% perceived quality − 3.9% packaging. | ||
Monoprix model Loyalty rate = 3.27/5 (obtained by Likert scale means on each construct) | 53.7% store service + 20.3% financial benefits + 16% decision-making benefits + 15.8% packaging + 15.6% perceived quality − 22.3% perceived price. |
store format.
For each retailer’s positioning, specific components of retail brand equity. The components of the retail brand equity are fully coherent with the operational marketing of retailers.
1) Thus, in the case of Carrefour: the created value depends on the perceived price (26.2% of the loyalty is built by the perceived price) and the perceived quality of its brand (13.4%). This result illustrates the positive feedback from the repositioning of the brand on its price image since 2001. Suffering from a high price image in comparison with that of Leclerc, the company decided to change it by creating a generic/economic retail brand namely Numero 1, and to communicate more on this axis. Moreover, the perceived quality is the primary development of the retailer and of its brand―the Carrefour Quality Channel celebrated its 10th anniversary in 2012 and attained 449 channels worldwide. This channel responds to consumer’s expectations in terms of food safety, freshness, taste, authenticity (traditional know-how) and respect for the environment. Carrefour finally possesses an internal panel of consumers to test new products and maximize the quality of its brand. The retailer is deeply involved in the quality development of his brand.
2) Marque Repère: the created value is explained by the decision-making benefits (39.3% of the loyalty) and financial benefits (12.5%). This result reflects the brand strategy of the Leclerc consortium’s objectives. Marque Repère is endeavoring to become a range marker to facilitate consumer choice. Price is historically the differentiation axis of the Marque Repère (Leclerc wanted it to be the new marker before the arrival of the Euro).
3) Monoprix brand: the created value is defined by the store’s service (53.7% of loyalty), a higher price (−22.3%), the decision-making benefits (16%), an appealing packaging (15.8%) and the high level of perceived quality (15.6%). However, the high level of prices destroys the sustainable relationship established in the model because it fails to comply with the expected item of “adequate price” (concerning standard retail brands). For this reason, this variable is negative in the Monoprix model (it destroys up to 22.3% of loyalty). This result is nevertheless consistent with both the positioning of this “popular store” and the “pull” brand strategy; unlike the two other hypermarkets―the adequate price variable being the key factor of their brand (in agreement with the positioning of these two discount hypermarkets). Monoprix has chosen to position its retail brand on the quality axis, the service and the innovation (for instance, products and stores like Dailymonop’ or the walk-in). The location of its stores in high city illustrates this value-oriented positioning (stores are only present in 85% of towns with over 50,000 inhabitants); such is the case of its many partnerships like Mellow Yellow, American Retro for fashion. Monoprix was also one of the first retail brands to develop its organic ranges, ethics and sustainable developments, that today feature about 2000 products. More recently, Monoprix has transgressed the original exclusivity of the retail brand by referencing it on websites such as Amazon, La Redoute, Brandalley or MonShowRoom.com. Those examples show the perceived credibility of the Monoprix brand, leading to conceptualize its brand equity, not in the field of retail brands but in the manufacturer brands framework.
Finally, note the minor role assigned to the packaging. This finding is due to the product chosen (self-service deli). The attractiveness of the packaging plays a minor role in functional purchases.
By calculating synthetic rate for each retail brand (
The retailer’s positioning maximizes sustainable relationship with the consumer. Only the Carrefour brand still has positive factors building its relationship with the consumer, while for the two other retail brands, certain factors are negative (perceived price for Monoprix, perceived quality and packaging for Marque Repère) and potentially destroy the relationship. Thus the Carrefour brand has the highest loyalty rate (4.32/5 against 3.18/5 for the Marque Repère and 3.27/ 5 for the Monoprix brand). To conclude based on the large number of components building retail brand equity and ultimately its best performance rates, the Carrefour brand creates a sustainable relationship with its customers through operational marketing policies that are consistent with the retailer positioning. It represents the most efficient retail brands (in terms of the differentiated image and the loyalty) regarding the number of positive levers. H3 is supported.
This article provides developments about the sustainable created value by standard retail brands (mostly oriented to functional components) in a price war against national brands. This research extends findings on the retail brand equity by measuring the impact of its antecedents on the loyalty to the brand and to the store. Testing one of the theoretical models of the retail brand equity [
1) A positive store service: 29.8% (created loyalty to the brand and the store is explained by a level of 29.8% store service);
2) A level of perceived quality: 26%;
3) Financial benefits: 15.8%;
4) An attractive, informative and practical packaging: 8.1%;
5) A short decision-making process: 5.5%;
6) A level of adequate prices: 2.6 %.
All of those components influence the loyalty both to the retail brand (repeat purchases) and to the store. They represent clearly differentiating axes to create a specific value to consumers.
To maintain the heterogeneous reality of retail brands, the model has been moderated by the retail branding policy―the store brand (its name is the same as the retailer’s name) appears to be a winning option because it maximizes the brand and the store loyalty.
Based on those results (relationships within the model are all significant), standard retail brands have built a sustainable relationship with consumers. Interestingly, it is confirmed that retail brands surpass the store loyalty. This result corroborates and extends previous contributions using some of the same variables in their retail brand equity model [
Our research also shows that building the standard retail brand equity clearly reflects the strategies of stores; retailers will perform marketing of their brands by including them consistently in the overall strategy of the firm. In other words, the decisive component of the standard retail brands value creation differs from one brand to another. This brand equity changes according to the store format: the “popular store” intensifies the sustainable relationship with customers. This result may encourage retailers to develop their convenience format in the city center offering a mix-retailing approaching that of the “popular store”.
Finally, by calculating the performance scores (estimated by the re-purchase of the retail brand and the loyalty felt by the customer towards the store), it seems that the hypermarket brand strategy maximizes sustainable relationship with customers (in the cases of standard retail brands in the self-service deli category). In the specific case of this research, the Carrefour brand maximizes the relationships within the model. Those results thus underline the importance of the discount in building a sustainable relationship with customers. It is useful here to show that the brand value can also be achieved through a discount strategy if and only if it is consistent with the original retailer’s positioning.
Choosing a product category (self-service deli), however, is a limitation to the work. One class of products has been selected which can hardly be applied to the entire range. It is a prospect of future research and encourages us to continue this work by extending it to other categories (Cuneo et al., 2012) in order to improve external validity. In addition, this category explains the minor role played by the packaging variable.
Another path for development will measure the impact of the standard retail brand equity on the valuation of retailer equity. This issue has prompted too little attention to date (to our knowledge, only the works of Fleck and Nabec (2010) [
Results of this research encourage retailers to pursue their marketing efforts in their brands. Until now, they have responded to customers’ expectations, encouraging them to buy again, and to be loyal to their store. This virtuous cycle of building a sustainable relationship, is only possible if the retail brand strategy is fully consistent with the retailer positioning. Hence, by operating the determinants of the sustainable relationship, specific to each brand, each retailer could maximize his retail brand value. This result complies with and develops the contributions of Beristain and Zorrilla (2011 [
Our paper finally highlights specific items for each retail brand, thus facilitating the tactical decision of the brand. For example:
1) In the case of the brand Carrefour, it would be worthwhile pursuing the efforts on the convenience store to maximize the Carrefour brand equity. The size of the store is a key factor in the retail brands success so why not propose a convenience store dedicated exclusively to Carrefour brand and strong manufacturer brands? Thus, the variables such as perceived price and perceived quality would be maximized by this kind of store. The launch of Carrefour Bio stores is one example.
2) In the case of Monoprix, thinking about the expansion of its retail brand to a lower price range would be relevant. By creating a low price retail brand, the firm could maximize consumers’ benefits and meets the original expectations of retail brands. This recommendation will be finally relevant for Monoprix since the firm will launch a new low price range (at the end of 2015), namely “P’tit prix” (similar as Essential Waitrose, Tesco Value or Sainsbury’s Basics). The objective (of those 200 low price products) is to improve the retailer price image. Our research confirms the importance for retailers (mass market) to maintain efforts on this variable even though the global positioning is value-oriented.
3) In the case of Marque Repère, it seems crucial to focus on the perceived quality of the brand. According to our results, Marque Repère doesn’t maximize its value for money. Actually, the perceived quality and packaging destroy its brand equity. In addition, the qualitative dimensions (perceived quality and packaging) of the Marque Repère could be a priority for development.
The author thanks Jean-Marc Ferrandi for giving valuable advice.
Jara, M. (2018) Retail Brand Equity: Measurements through Brand Policy and Store Formats. American Journal of Industrial and Business Management, 8, 579-596. https://doi.org/10.4236/ajibm.2018.83038
The square cosines indicate the quality of the projection of the brands on the axes. The following table shows the projection of the Carrefour brand is acceptable on both axes. For Monoprix, only the “original retail brand assets” axis can be interpreted and the projection of the Marque Repère can be assessed only on the “value for money” axis.