To introduce a store brand or not: Roles of market information in supply chains

Abstract

Retailers in multiple market segments have opposing business practices regarding whether to introduce a store brand. Assuming that manufacturers and retailers have symmetric knowledge on market information, prior literature has shown that retailers have incentive to introduce a store brand in cases in which the store brand intensively competes with the national brand. Information asymmetry, however, is prevalent in supply chains. In the era of big data, the latest advances in technology intensify information asymmetry by allowing retailers to access market information with improved accuracy. To address such information asymmetry, some retailers share information with manufacturers, while others do not. The gap between prior studies and current industrial practices motivates us to explore the roles of market information in supply chains regarding store brand introduction. In this research, we consider a two-echelon supply chain in which the retailer has an advantage over the manufacturer in accessing market information. In the focal supply chain, four decision scenarios are present, each of which deviates from the others on the retailer’s decision on information sharing and store brand introduction. By evaluating and comparing supply chain performances in these decision scenarios, we demonstrate the influence of information accuracy on the incentive for the retailer to introduce a store brand and the mitigation effect of information sharing on such influence. In particular, we contribute to the literature by finding that, surprisingly, high information accuracy prevents store brand introduction even if brand competition is intensive. This research bridges the gap between prior research and industrial practices and is the first to consider information asymmetry and information sharing in the context of store brand introduction. Our findings contribute to theories of store brand introduction and provide information sharing for practitioners as a managerial tool to realize the full potential of store brands.