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Advances In Management Vol. 3 (6) June (2010)
Case Study:
Apparel Private Label Brands and Store Patronage
Sasinandini S.'* and Lysander Manohar Hansa ~
1. Department of Matiagemeni Studies, Women's Christian College, Chennai. INDIA
2. Anna University, Chennai, INDIA [
*sasi.sani@gmail.coni ,
Abstract
Apparel sector in particular has a great
opportunity with alignment of Indian economy to
globalize markets. The foray of private labels in apparel
retail is very pronounced making market to have the
second highest percentage of organized retail. Apparel
retailers have popularized their private labels which
have attracted shoppers and thus have increased the
loyalty to a store rather than any particular garment
brand. Private label brands have become an important
contributor to retail differentiation and basis for
building store patronage.
The decision to 'patronize a particular store
u.sually starts with a set of characteristics or attributes
that consumers consider important. Consumers then use
these attributes to make decisions regarding what store
or stores can cater to their particular needs. Past retail
and marketing studies have identified several consumer-oriented
store attributes such as price, quality, variety,
discounts and store reputation hut the relation with
store patronage and loyalty and store image has not
been studied. This paper tries to focus on how private
lahei brands are inducing store patronage among the
customers.
Keywords: Apparel. Label brands. Store Patronage. India.
Introduction
Two major features of the retailing industry
evolution and growth are increased concentration and the
spread of private label products. Store brands or private label
brands are brands owned, controlled and sold exclusively by
a retailer*. Over the period of time, a overabundance of
different names and definitions have been used to explain this
concept. The widely used terms are private labels, own
brand.s. retailer brands, wholesaler brands, store brands or
distributor own brands.
P*rivate label brands which were first introduced over
KM) years ago in few product categories, had seen an
impressive growth in past few decades^^. Private labels
proliferated in a number of product categories and garnered
major market share as retailers perceived numerous benefits
by their introduction. Apart from providing higher retail
margins in comparison to national brands'*, private labels
added diversity to the product line in a retail category^'.
Added benefits accrued to the retailer in terms of
differentiating its offerings from competing retailers as well
as having greater leverage with manufacturers of national
brands. Private labels are generally launched to gain higher
gross margins from branded products. They differentiate the
retailer's own product from the branded ones and aim to gain
and sustain consumer loyalty. They provide a competitive
benefit to the retailer over branded players. It also offers a
platform for the retailers to negotiate with branded players.
Thus if store brands serve as a differentiator, it is possible
that a consumer who likes the store brand will shift more of
its purchases to the store and thus expand the overall share of
spending in the category to the focal store.
Growing Consumer Acceptance of Private Labels: The
success of the private label ultimately depends on the
consumers mind set whether he is ready to pay for the private
label apparel or not. It depends on the kind of sales and
margin level the retailer can drive in the business. There was
a time when private label clothing was considered to be a
choice of buying only during recessions. In the past, private
labels targeted the lower income peopie, But, today private
labels are fully accepted and even wealthy shoppers go in for
buying them. Buying private label apparels is in trend
currently and is considered as 'Smart Shopping*. Two out of
every three shopper in the world believe that supermarket
owned private labels are as good as the other brands. India is
an extremely under branded country with brands having only
an 8% penetration of the overall market.
Private labels in India: The main retail players in India
sporting private labels have identified and settled into a
feasible and sustainable business model of their own. Rather
surprisingly, each has developed a unique model. Westside
has very successfully emulated a Marks Sc Spencer model (of
100 per cent private label, very good value for money
merchandise for the entire family). Spencer's Daily and
Nilgiris have successfully shown the viability of the
"supermarket' format in India and its ability to co-exist with
the ubiquitous Kirana store. Pantaloon has both demonstrated
the potential of "specialty" retailing in India.
Literature review, conceptual development and
hypothesis
Research on Private label brands, has been of
substantial interest to marketing scholars for more than four
decades^^. particularly from the 1990s to the present. Hoch
and Banerji^^ state that consumers, retailers and
manufacturers are three set of players whose expectations and
actions interact to influence the success of Private label
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Advances In Management I Vol. 3 (6) June (2010)
brands. The initial studies on private labels were mainly on
the demographic, psychographic and behavioural
characteristics of private label consumers.'^" '^' ^^ The number
of studies that have looked into the corporate- level factors,
namely, retailers and manufacturers, started to increase since
the 1990s. These corporate factors relate primarily to the
price differential between PLBs and national brands,
promotion intensity and category margin.^"' ^^' "
Private label brands were created and positioned to
meet consumer price expectations.
Majority of the studies were focused on price
sensitivity and quality perceptions. The studies indicate that
many of the private labels have offered more innovative,
qualitative and segmented product ranges that are close to
those of manufacturer's brands.'''^ ^'' "• ^^ Numerous studies
point out that there are now consumer segments that are very
favorable to the private label brands.'• ^^ Recent research also
clarifies the optimal prerequisites for their introduction along
financial and category lines."' "' ^'' " It usually regards the
relationship between private labels loyalty-building capacity
and the increase in their market share as an implicit one,
while noting that there is actually no involvement of
consumers with them.^*- ^^ Few authors have, in fact,
dealt directly with own brands by addressing consumer
loyalty.^' '^' ^' After a considerable contribution of the loyalty
studies the researchers aimed at studying store patronage but
on the question on whether private label brand can induce
store brand patronage there is very little to report in the
existing literature. In a recent^paper, Sudhir and Debabrata
Talukdar^^ have studied the impact of store brand patronage
on store patronage based on the variables, shopping
frequency and coupon responsiveness and basket width.
As grocery shopping is more of a routine, the results
are not applicable to apparels as the latter involves more
involvement and experience characteristics because consu-mers
rely on how the clothes fit, how it feels, how it looks on
them when worn and expectation of how it would withstand
the wear and tear of use. Batra and Sinha^ suggest that some
of the dimensions of purchase behaviour of clothes are
different from that of purchase behaviour of groceries. In this
study we explore the consumer perceptions of attitude
towards private labels, satisfaction with purchase and private
label loyalty and store patronage regarding apparels in India
Confident shopping orientation: Shopping orientations
reflect categories of shopper styles and can represent
consumer needs for products and services. Shopper orienta-tions
may be used to represent consumers" personal,
economic, recreational and social motivations for shopping.
Darden and Dorsch^" state that orientations are based on past
shopping experiences and the personal value system. In a
study conducted by Shim & Kotsiopulos^"" to predict the
apparel store patronage behaviour, shopping orientation had
the greatest impact on patronage behaviour. Of the 11
categories of orientations studied, confident shopping
orientation has been selected as these consumers are
described as being good clothing shoppers, confident in their
ability to choose the right clothing for themselves and had an
up-to-date wardrobe. Furthermore, they would buy clothing
they like without hesitation. To suit the needs of these
shoppers the store need to carry more number of private label
brands.
HI: Level of confident shopping orientation is positively
related to purchase of private labels and its Loyalty
Variety seeking buyer behaviour: Variety seeking
behaviour is an outcome of the desire to seek something
unique and different from the usual. According to
Fromkin^^'^', individuals possess a need to feel different from
others in a social environment. More importantly, individuals
vary in terms of the intensity of this uniqueness need. Those
who do possess a strong desire to be different will search for
ways to express their uniqueness. One solution is to adopt
new and different products."*" Thus the need for uniqueness in
selection of apparel may result in the adoption of different
brand alternatives due to an assertion of individuality.
Only when there are more alternatives, the
opportunity to switch brands will be possible. As the apparel
private labels throw a variety of alternatives, the customers
will be interested in switching brands. Though variety
seeking behaviour was originally associated with low
involvement, frequently purchased product categories have
spread its wings to high involvement infrequently purchased
product categories like apparels as well. Therefore we
hypothesize that if more number of private label brands are
available, there is a greater likelihood for a customer to
exhibit his variety seeking behaviour
H2: Variety seeking behaviour is positively related to the
purchase of private label brands and negatively related to its
loyalty
Attitude towards PLB: Research on private label brands
has focused on customer attitudes towards store branded
products and investigated consumer's individual level
personality traits affecting such an attitude'^ in order to
identify potential market segments for private labels."'
Granzin identified differences among high, medium and
non- users of store brands products for demographic
characteristics (age, income, children, home ownership, car
ownership) price/quality emphasis, brand loyalty discount
store patronage and risk taking. Recent researches have
examined the antecedents and outcomes of generalized
private label attitude. Factors that influence store brand
attitudes are consumer price consciousness, price-quality
perceptions, deal proneness, shopping attitudes,
impulsiveness, brand loyalty, familiarity with store brands,
reliance on extrinsic cues, tolerance for ambiguity,
perceptions of store brand value and perceived differences
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Advances In Management
between store brands and national brands.''- ^^ Attitude is a
cornerstone of numerous models of consumer behaviour'*l
Attitude can relate to some aspects of consumption
(di.scounts, for example), or be more directly connected with
an object, whether it is a product, brand or service. It has
diverse psychological antecedents and is supposed to generate
favourable behavioural responses. It may affect brand loyalty
as thi.s occurs when "favourable beliefs and attitudes exist,
and that they are displayed by behaviour of repeated
purchases". Research work by Burton et al'' contributed to
correlating attitude toward private label products with
purchase or purchase intention for private labels. It is also
accepted currency that attitude fits around experience.
Accordingly, private label loyalty can be fundamentally
correlated with customers* consumption experience and thus
with satisfaction. Therefore, integration of Private label
attitude will positively affect the strength of the relationship
between Private label brand satisfaction and loyalty
H3; Private label brand attitude will positively affect the
satisfaction and the loyalty of private labels
lmpul.se buying tendency: A purchase which is a result of
predetermined search and is deliberate then it is planned.
Contrary to a planned purchase, impulse buying is a
spontaneous and immediate purchase ^ where the consumer
is not actively looking for a product and has no prior plans to
purchase . The purchase is unintended because it is made
while shopping, although the individual was not actively
looking for that item, had no pre shopping plans to purchase
the item and was not engaged in a shopping task, such as
looking for u gift which the item satisfies. Unintended buying
arises from a sudden urge to buy a specific item while
shopping. It usually occurs after the customer sees the
product and needs to own or use it.
Unintended and unplanned have long been
associated with impulse buying and is necessary but not
sufficient basis for categorizing a purchase as an impulse
purchase,""' "• "^ Impulse buying is unrefleciive in that the
purchase is made without engaging in a great deal of
evaluation. Individuals buying on impulse are less likely to
consider the consequences or to think carefully before
making the purchase.'^ The person's attention is focused on
the immediate gratification of responding to the urge to buy
rather than on solving a pre existing problem or on fmding an
item to fill a predetermined need. Finally, consistent with
general impulsiveness, impulsive buying i.s immediate.^^
Time interval between seeing the item and buying it is very
short and the decision to buy is made hastily. An individual
making an impulse purchase responds quickly to the urge and
makes a spontaneous decision to purchase the item without
delay. Furthermore, the individual is not likely to postpone
the purchase in order to gather more information, comparison
shop, seek advice. Beyond spontaneity. Rook'" further
described impulse buying as an intense, exciting urge to buy
Vol. 3 (6) June (2010)
without regard to the consequences of the purchase decision.
Beatty and Ferrell^ defined impulse buying as instantaneous
purchase having no previous aim or objective to purchase the
commodity. In apparel purchase, consumers may purchase
private labels during the shopping exploration, if they
recognize its suitability for satisfying a particular need,
H4: Impulse Buying Tendency is positively related to the
purchase of PLB and negatively related to its loyalty
Affective commitment to the store: Affective commitment
and behavioural loyalty are usually considered as key
elements of customer loyalty. Affective commitment is
considered a necessary condition for customer loyalty.
It enables one to differentiate between true customer loyalty
and simple repeat buying. True customer loyalty is based on
affective commitment while repeat buying is not. The latter is
based on inertia. '^ True customer loyalty is said to exist when
a customer's behavioural loyalty is accompanied with a high
affective commitment.
As a result, affective commitment is considered as a
necessary condition for true customer loyalty to occur."
Affective commitment involves the desire to maintain a
relationship that the customer perceives to be of value. '*^ It
mainly reflects the nature of relationship between the
customer and the provider of service and usually the
customers are motivated to continue their relationship with
the service. Thus, the emotional attachment that affective
commitment entails translates into strong attitudinal loyalty
both through the extremity of the attitude (attitude strength)
and the extent to which customer is willing to look into a
specific relationship (attitudinal differentiation).'* Therefore
affective commitment to the store will induce purchase of
private labels.
H5: PLB Purchase and Satisfaction with the purchase is
positively related to Affective Commitment to the store and
PLB Loyalty.
PLB Loyalty: Satisfaction with PLB leads to repeated
purchase of that unique brand. Thus greater loyalty creates
profitability for store brands and ultimately to store
patronage. Loyalty is the prime attitudinal objective that
every marketer/retailer aims for with his marketing/retail mix
elements. Loyalty assures a retailer of patronage, of not just
constancy and longevity of his business but creates an
effective competitive advantage and an entry barrier which is
difficult to erode. The concept of store loyalty is derived
from brand loyalty concept which refers to the tendency to
repeat purchase the same brand. At the Store level, it refers to
the tendency to repeat purchase at the same store for similar
or other products.^
H6: Private label brand loyalty is positively related to store
patronage
Store Patronage: Haynes, Pipkin, Black and Cloud'" define
pau-onage as how individuals choose an outlet for shopping.
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Store choice and patronage patterns are based on consumer's
perceptions, images and attitudes formed from experiences,
information and need. Furthermore, patronage behavior
involves a decision process related to where consumers shop,
how they shop and what they purchase.
This decision process is often initiated by patronage
motives, which determine why consumers shop and make
purchases at certain retail stores.'''' As stated by Haynes et
al'^. the patronage decision process involves three basic
components: retailer attributes, consumer characteristics and
the choice context. Store patronage involves the consumer's
choice for a particular retail store." Past retail and marketing
studies have identified several consumer oriented store
attributes (e.g. price, quality, variety, discounts, store
reputation) and their relationship to store patronage, but the
influence of store brands to store patronage has not been
studied
Methodology
The data were collected using a survey methodo-logy.
The administrator of the survey personally collected the
data in classrooms at reputed Colleges and from public who
purchase apparels in stores which either sell only private
labels or have a particular section in the store devoted for
private labels in Chennai. Respondents were instructed to
answer the questions based on their most recent purchase
experience. The administrator before administering the
survey instrument ensured that the respondents understood
the meaning of private labels.
Pre test: The measures were pre-tested with college students
(A'=60) enrolled in a variety of majors at reputed Colleges in
Chennai. Pre test subjects were asked to complete the
questionnaire based on their most recent purchase experience.
Interviews with respondents indicated that the item wording
was clear and easy to understand. In addition, analyses of
descriptive statistics indicated no skewness or kurtosis. Scale
reliability was performed on each measure. All the measures
excepting variety seeking behaviour and impulse buying
behaviour were retained, lmpul.se buying behaviour was
changed from Weun et af^ scale and Variety Seeking
Behaviour from Steenkemp and Baumgartner^ to
Narasimhan et al' because of low reliability.
Sampling method and procedure: The primary objective
guiding the sample selection for this study involved finding a
homogeneous group of consumers who prefer to purchase
private label brands. A college student sample was selected as
the sampling frame. Therefore, the sampling method can be
characterized as both convenient and purposive.^* The use of
student samples in consumer behaviour research has been
criticized because of the debate surrounding whether
the results obtained can be generalized to the larger
population.''^^' ^ ^' However, many researchers argue that the
differences between using student samples versus consumer
Vol. 3 (6) June (2010)
samples are minimal enough to justify using students as
subjects.''*' ^' " In addition, researchers argue that student
samples provide homogeneity and help to control error when
undertaking theory testing.'^' "'^ Assael and Keon'' demons-trated
that the likelihood of measurement model error is
inflated by situational factors (e.g. income and education) in
diverse samples and can be reduced by using homogeneous
respondents. Therefore, by using a homogeneous sample, a
lesser degree of external validity was sacrificed for a greater
degree of internal validity.
Measures: Scales for the independent and the dependent
variables were adopted from the extant literature due to their
relevance to the study's context and past measurement
reliability. Confident shopping orientation was measured
using Shim and Kotsiopulos ^ scale. Variety Seeking
Behaviour and Impulse Buying Behaviour were measured by
using the Narasimhan, Neslin and Sen^' scales.
Richardson et al^^ and Burton et al'^ scales were
used to measure PLB attitude. Affective Commitment was
measured using 9 indicators given by De Wulf^ The
endogenous variable or mediator PLB Loyalty is measured
using three indicators or scale measures based on Ailawadi et
al'^. Chowdhury et al'^ scale was used to measure store image.
All measures required respondents to evaluate their apparel
retail shopping experience across each item on a five-point
Likert-type scale.
Analysis: A two-stage structural equation modeling (SEM)
method was used for data analysis. Confirmatory factor
analysis (CFA) was performed to determine whether the
scales used to measure the constructs required modification.
In addition, reliabilities were assessed on the results of the
confirmatory analytic model. Once the scales were
confirmed, a SEM was produced.
Structural Equation Modeling: To test our model, we
followed the structural equation modeling approach.
Following Anderson and Gerbing', we followed a 2-step
approach, first "cleaning up" the measurement model before
analyzing the structural model.
Measurement Model: After assessing the individual
reliability of the constructs, assessments of the final
measurement model were as follows: Chi square (x') Í309)
=527.885 (p = 0.0); Adjusted Goodness of Fit Index (AGFI)
= 0.895; Comparative Fit Index (CH) = 0.966 and the
Bentler-Bonnet Non- Normed Fit Index (NNH) = 0.956.
Further, the indicators of residuals. Root mean square
residual (RMSR) and Root Mean Square Error of
Approximation (RMSEA) were both 0.039.
Structural Model: Chi-square value for the overall model fit
was 833.616 for 314 degrees of freedom (p<O.()OI). Fit
indices for the above model were NFI = 0.880; NNFI =
0.897; CFI = 0.920; IH = 0.922; GFl = 0.892; AGR = 0.851 ;
RMSR = 0.097; RMSEA = 0.060.
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Confident Shopping
Orientation Fl
T value 4.014
Structural co-efficient .238
Affective
commitment
towards store
F4
STANDARDIZED SOLUTION: R-SQUARED
PLBLOY =F6 =-.087*FI + .064*F2 + .929*F3 -i-.238*F4 .995 - .I32*F5
SP =F7 = .467*F6 + .884 D7 .218
GOODNESS OF HT SUMMARY FOR METHOD = ML
CHI-SQUARE = 833.616 BASED ON 314 DEGREES OF FREEDOM
PROBABILITY VALUE FOR THE CHI-SQUARE STATISTIC IS .00000
FIT INDICES
BENTLER-BONETT NORMED FIT INDEX
BENTLER-BONETT NON-NORMED FIT INDEX =
.068D6
.880
.897
COMPARATIVE FIT INDEX (CFI)
BOLLEN (IFI) FIT INDEX
MCDONALD (MFI) FIT INDEX
LISREL GH HT INDEX
LISREL AGH FIT INDEX
ROOT MEAN-SQUARE RESIDUAL (RMR)
STANDARDIZED RMR
.920
.922
.568
.892
.851
.097
.102
ROOT MEAN-SQUARE ERROR OF APPROXIMATION (RMSEA) = .060
90% CONHDENCE INTERVAL OF RMSEA (.055, .065)
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Advances In Management -«——=^
Results and Discussion
Thus, overall the model can be considered to have a
high level of fit, as most of the fit indices show a good fit for
the model by Hu and Bentler" and {I < x^/df < 5) by
Wheaton et af^ Moreover, due to the dependency of the y^
statistic on the sample size, a higher than cut-off value of
comparative fit index (CFI) and a value of the ^/df ratio
between 1 and 5 indicate a good fit.
R for our ultimate dependent variable, the
prediction of store patronage was 0.21. R" for Private label
loyalty was 0.995. leading us to conclude that this model does
provide considerable insight in regard to store patronage.
The path coefficient between confident shopping
image and PLB Loyalty (H3) is 0.087 (i= -1.059. not
significant) and the hypothesis was not supported. This result
was surprising as it is widely believed that confident
shopping orientation leads to PLB loyalty and hence it plays a
very important role. No meaningful insights could be drawn
as the path coefficient is insignificant and a simulated
experimental condition with affect priming will help us probe
into the underlying causes.
Variety Seeking Behavior and PLB Loyalty: The path
-'.Vol.3 (6) June (2010)
coefficient between variety seeking behaviour and PLB
Loyalty (H3) is 0.062 (/= .733 p=.Ol) and the hypothesis is
not supported. A consumer with variety seeking behaviour
will not be loyal to any product.
Impulse buying behaviour and PLB Loyalty: The path co-efficient
between impulse buying behaviour and PLB Loyalty
(H3) is .132( t =-2.176), thus the hypothesis is supported. A
consumer with impulse buying tendency will be not be loyal.
PLB Attitude and Affective Commitment towards the
Store: PLB attitude and affective commitment towards the
store are positively related to the loyalty of private labels with
path co-efficient between attitude and loyalty being .929 and
affective commitment to the store and loyalty being.238 and
theircorrespondingt values 12.385 and 4.014.
The loyalty of private labels with a path co-efficient
of .467 and t-value 8.601 strongly supports our hypothesis
that store patronage is influenced by private label loyalty.
Conclusion
This research has a number of limitations that must
be acknowledged. First, the sample used for this study
consisted entirely of college students- mostly female.
Reliabilit}'
Scale
Confident shopping orientation
Product Involvement
Variety .seeking Behaviour
Impulse buying Behaviour
Attitude towards PLB
PLB Loyalty
Affective commitment towards the store
Store patronage
Table 1
scores for pre test
No. of items
4
3
6
5
5
3
8
3
Cronbach's alpha
.730
.664
.444
.546
.698
.743
.852
.766
Table 2
Structural model results for Store patronage model
Hypotheses
number
Ml
H2
H4
H3
H5
H6
Hypotheses
Confident shopping orientation
Variety seeking behaviour
Impulse buying behaviour
PLB attitude
Affective commitment towards store
PLB Loyalty
Predicted
Direction
+
+
-
+
+
+
Observed
Direction
-
+
+
+
Path Coefficient/
(t-value)/ P value
(-1,059)/Not significant
(.733) not significant
(-2.716)
(12.358)
(4.014)
(8.601)
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Table 3
Reliability and Source of Scales
Scale
Confident shopping orientation"
Variety seeking behaviour^'
Impulse buying behaviour*"'
PLB attitude"'^^
Affective commitment towards the
''I store
PLB loyalty**
Store Patronage-^' ™
No. of
items
4
2
4
5
8
3
3
Alpha
.772
.590
,829
.778
.903
.801
.847
Table 4
Effect decomposition of predictor variables on Store
Patronage
Predictor variables
Confident Shopping
Orientation
VSB
IBB
PLB attitude
Affective commitment
towards store
PLB U)yalty
Store Patronage
Direct
Effect
.467
Indirect
Effect
.040
.029
.061
.433
.111
Total
Effect
.040
.029
061
.433
.111
.467
Therefore, these results may not be applicable to the wider
population in general. Secondly, the results of this study are
limited to a specialty apparel retail branded purchasing
context. Lastly, it must be acknowledged that there may be
numerous other variables that contribute to the development
of Store patronage induced by private Iabels.The primary
objective of this study was to answer the question: "Can
Private Label brands induce Store Patronage?" The findings
uf the study indicate that private labels can induce loyalty
through a favourable attitude creation for private labels and
an affective commitment towards the store and thereby
inducing Store patronage.
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(Received 22'"' December 2009, revised 25'" March 2010.
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