The influence of private labels on retailer cooperation

Abstract

Retailers’ private labels are unlike normal competitors to manufacturers’ national brands. From a channel viewpoint, retailers’ private labels do not merely compete on a horizontal level with manufacturers’ national brands. Competition between national brands and private labels also influences the vertical channel relationships between manufacturers and retailers, potentially reducing the level of cooperation manufacturers can obtain from retailers with respect to their national brands.In contrast to recent studies focusing on the influence of private labels on store image, success factors of private labels, and the marketing approaches by manufacturers in response to that success, this exploratory study examines the influence of retailers’ private labels on the level of cooperation between manufacturers and large retail chains. Surprisingly, preliminary results suggest that private labels can have a positive effect on cooperation in some situations and may offer manufacturers an opportunity to increase the level of cooperation obtained from retailers.