Marketing store brands and manufacturer brands: Role of referent and expert power in merchandising decisions

Abstract

The purpose of this article is to explore the use of power in the merchandising of store brands and manufacturer brands in a highly concentrated fast-moving consumer goods (FMCG) retail environment where grocery retailers wield phenomenal power over manufacturers. The study employed in-depth interviews and in-store category observation in five product categories and triangulated the results of the two study methods and the five categories. While grocery retail chains own the point of sale and market their own store brands alongside competing manufacturer brands, despite having the balance of power over manufacturers in a highly concentrated grocery retail environment, it is not necessarily coercive power that drives merchandising practice for store and manufacturer brands. Indeed, referent and expert bases of power play a key role. Consistent with rational business judgement, what is best for the consumer and the business is what largely gets factored into merchandising policy. Little research has specifically scrutinised the merchandising patterns of store and manufacturer brands in a highly concentrated FMCG retail environment using specific sources of power as a theoretical base. This article further suggests a relevant theoretical framework for store and manufacturer brand merchandising practice in a highly concentrated FMCG retail environment.