Brand Equity of Store Brands and Its Effect on Customer Value: Spanish Consumer Goods Retail Sector

Introduction

The distribution sector for consumer products in Spain is changing markedly. A recent report about food in Spain prepared by the Ministry of Agriculture, Alimentation and Environment (2015) reveals a number of trends, amongst which we outline:

• 1.

  The decline in total expenditure on food in Spanish households (-2.3% in 2014 compared to 2013),

• 2.

  The preference for the supermarket format (43% of respondents according to the report), and the loss of market share of hypermarket, and

• 3.

  The growth of discount formats (+1.8% in 2014) and specialty stores for fresh products.

Also, multi-format chain stores increase and the slight fragmentation of the market takes place. All this leads to increased competition in the retail channel, which increases the importance of managing customer value, an essential asset for optimizing the performance of any business.

Also, the importance of store brands (SB) in this sector in Western economies deserves a special attention. The share of SB is growing, stimulated, among other factors by the economic recession. According to the International Private Label Yearbook 2014 of the Private Label Manufacturers Association (PLMA), the market share in value of store brands increased, with an average share of 35.6%. Spain is the European country with the highest market share growth, both in terms of value (+1.3% in 2013 compared to 2012 and the market share in value achieves 38%) as well as volume, with a share of 51%, which is just behind Switzerland (53%) (PLMA, 2014). These data highlight the importance of SB for retailers that manage them, constituting a valuable asset and a differentiating attribute for the chains they market.

Due to this background, the study aims to investigate the integration of two valuable assets for companies in retail distribution: customers and SB. The conceptualization and measurement of both assets has run along divergent lines of research. For this, several objectives are pursued:

• 1.

  Define and implement a comprehensive analysis of perceived customer value for five of the main distribution groups in the country: Mercadona, Carrefour, Auchan, Eroski and El Corte Inglés,

• 2.

  Conceptualize and measure the brand equity of the store brands of these groups, and

• 3.

  Analyze how store brands of these retailers improve customer value, and consequently improve financial returns in the short and long term.

This work aims to bring the results of academic models to agents in the sector, through the proposal of lines of business action. It entails proposing concrete marketing actions to improve customer value for each of the retailers in particular, knowing their position in regards to their own brands. In this way, the authors facilitate the segmentation process for retailers identifying customer profile types according to their buying habits (regular customer versus non regular customer) and according to their habits towards store brands (intensive buyer of store brands versus non intensive buyer of store brands). Also, the present work quantifies the value of the customer profile types identified.

As a result, retailers can gain a better understanding of how customers perceive the management carried out in relation to their store brands. Also, retailers can discover their positioning in regards to the value offered to their customers thanks to their store brands, involving this work a huge contextual richness.

The paper is organized as follows. The following section contains a review of the literature on customer value and SB brand equity, followed by a methodological section. Subsequently, the resulting analysis is presented and concludes with a discussion of the results, limitations and future research lines.