How Delisting All National Brands in a Given Assortment Impacts on Consumers’ Store Switching Intentions
Brand delisting is a specific type of assortment reduction. It refers to the removal of all items of a single brand, leading to the unavailability of the brand within the store (Sloot and Verhoef 2008, p. 281). Recent retailing-related professional publications indicate that national brand (NB) delistings are not uncommon in food retailing (e.g., the American retailer Wal-Mart, the Dutch food retail chain Edah, the UK retailer ASDA, the German retailers Edeka and Metro, and the Spanish retailer Mercadona). Conflicts of retailers with manufacturers seemed to be behind such delisting decisions. Indeed, delisting – or threatening to delist – a manufacturer’s brand is a tool that retailers often use to improve their negotiation position with brand manufacturers. Notwithstanding, despite the great managerial relevance of this topic, researchers have paid almost no attention to brand delisting so far. There is only limited research (papers by Boatwright and Nunes 2001; Sloot and Verhoef 2008; Wiebach and Hildebrandt 2012) on the effects of an entire brand delisting. However, none of these papers analyzes the consequences of delisting all national brands in a given assortment, so that a retailer offers an assortment based only on private labels (PL). Can a retailer ‘push out’ all manufacturer brands from its shelves, offering only its own brand, with no consequences? This is the main research question of our paper.
In summary, our results reveal that retailers should be particularly careful about delisting NBs (specially high-equity NBs), given that there is an inverse relationship between assortment size and the intentions to switch to another store to purchase the category as well as the whole shopping-basket. Therefore, we recommend retailers to offer assortments containing both their own brand and a higher number of NBs (nine vs. three). Offering ‘only-PL’ assortments has negative consequences in terms of consumers having a greater probability to switch to another store to purchase. Nevertheless, for retailers offering ‘mixed’ assortments, a higher proportion of high-equity NBs may help to reduce the intentions to switch to another store.
This research has been funded by Foundation Ramón Areces (Spain).