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Advances In Management Vol. 3 (6) June (2010)
Case Study:
Apparel Private Label Brands and Store PatronageSasinandini S.'* and Lysander Manohar Hansa ~
1. Department of Matiagemeni Studies, Women's Christian College, Chennai. INDIA
2. Anna University, Chennai, INDIA [
AbstractApparel sector in particular has a great
opportunity with alignment of Indian economy toglobalize markets. The foray of private labels in apparelretail is very pronounced making market to have thesecond highest percentage of organized retail. Apparelretailers have popularized their private labels whichhave attracted shoppers and thus have increased theloyalty to a store rather than any particular garmentbrand. Private label brands have become an importantcontributor to retail differentiation and basis forbuilding store patronage.
The decision to 'patronize a particular storeu.sually starts with a set of characteristics or attributesthat consumers consider important. Consumers then usethese attributes to make decisions regarding what storeor stores can cater to their particular needs. Past retailand marketing studies have identified several consumer-oriented store attributes such as price, quality, variety,discounts and store reputation hut the relation withstore patronage and loyalty and store image has notbeen studied. This paper tries to focus on how privatelahei brands are inducing store patronage among thecustomers.
Keywords: Apparel. Label brands. Store Patronage. India.
IntroductionTwo major features of the retailing industry
evolution and growth are increased concentration and thespread of private label products. Store brands or private labelbrands are brands owned, controlled and sold exclusively bya retailer*. Over the period of time, a overabundance ofdifferent names and definitions have been used to explain thisconcept. The widely used terms are private labels, ownbrand.s. retailer brands, wholesaler brands, store brands ordistributor own brands.
P*rivate label brands which were first introduced overKM) years ago in few product categories, had seen animpressive growth in past few decades^^. Private labelsproliferated in a number of product categories and garneredmajor market share as retailers perceived numerous benefitsby their introduction. Apart from providing higher retailmargins in comparison to national brands'*, private labelsadded 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 wellas having greater leverage with manufacturers of nationalbrands. Private labels are generally launched to gain highergross margins from branded products. They differentiate theretailer's own product from the branded ones and aim to gainand sustain consumer loyalty. They provide a competitivebenefit to the retailer over branded players. It also offers aplatform for the retailers to negotiate with branded players.Thus if store brands serve as a differentiator, it is possiblethat a consumer who likes the store brand will shift more ofits purchases to the store and thus expand the overall share ofspending in the category to the focal store.
Growing Consumer Acceptance of Private Labels: Thesuccess of the private label ultimately depends on theconsumers mind set whether he is ready to pay for the privatelabel apparel or not. It depends on the kind of sales andmargin level the retailer can drive in the business. There wasa time when private label clothing was considered to be achoice of buying only during recessions. In the past, privatelabels targeted the lower income peopie, But, today privatelabels are fully accepted and even wealthy shoppers go in forbuying them. Buying private label apparels is in trendcurrently and is considered as 'Smart Shopping*. Two out ofevery three shopper in the world believe that supermarketowned private labels are as good as the other brands. India isan extremely under branded country with brands having onlyan 8% penetration of the overall market.
Private labels in India: The main retail players in Indiasporting private labels have identified and settled into afeasible and sustainable business model of their own. Rathersurprisingly, each has developed a unique model. Westsidehas very successfully emulated a Marks Sc Spencer model (of100 per cent private label, very good value for moneymerchandise for the entire family). Spencer's Daily andNilgiris have successfully shown the viability of the"supermarket' format in India and its ability to co-exist withthe ubiquitous Kirana store. Pantaloon has both demonstratedthe potential of "specialty" retailing in India.
Literature review, conceptual development andhypothesis
Research on Private label brands, has been ofsubstantial interest to marketing scholars for more than fourdecades^^. particularly from the 1990s to the present. Hochand Banerji ^ state that consumers, retailers andmanufacturers are three set of players whose expectations andactions interact to influence the success of Private label
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brands. The initial studies on private labels were mainly onthe demographic, psychographic and behaviouralcharacteristics of private label consumers.'^" ' ' ^ The numberof studies that have looked into the corporate- level factors,namely, retailers and manufacturers, started to increase sincethe 1990s. These corporate factors relate primarily to theprice differential between PLBs and national brands,promotion intensity and category margin.^"' ' "
Private label brands were created and positioned tomeet consumer price expectations.
Majority of the studies were focused on pricesensitivity and quality perceptions. The studies indicate thatmany of the private labels have offered more innovative,qualitative and segmented product ranges that are close tothose of manufacturer's brands.'''^ ^'' "• ^ Numerous studiespoint out that there are now consumer segments that are veryfavorable to the private label brands.'• ^^ Recent research alsoclarifies the optimal prerequisites for their introduction alongfinancial and category lines."' " ' ^'' " It usually regards therelationship between private labels loyalty-building capacityand the increase in their market share as an implicit one,while noting that there is actually no involvement ofconsumers with them. *- ^ Few authors have, in fact,dealt directly with own brands by addressing consumerloyalty.^' ' ' ' After a considerable contribution of the loyaltystudies the researchers aimed at studying store patronage buton the question on whether private label brand can inducestore brand patronage there is very little to report in theexisting literature. In a recent^paper, Sudhir and DebabrataTalukdar^^ have studied the impact of store brand patronageon store patronage based on the variables, shoppingfrequency and coupon responsiveness and basket width.
As grocery shopping is more of a routine, the resultsare not applicable to apparels as the latter involves moreinvolvement and experience characteristics because consu-mers rely on how the clothes fit, how it feels, how it looks onthem when worn and expectation of how it would withstandthe wear and tear of use. Batra and Sinha^ suggest that someof the dimensions of purchase behaviour of clothes aredifferent from that of purchase behaviour of groceries. In thisstudy we explore the consumer perceptions of attitudetowards private labels, satisfaction with purchase and privatelabel loyalty and store patronage regarding apparels in India
Confident shopping orientation: Shopping orientationsreflect categories of shopper styles and can representconsumer 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 pastshopping experiences and the personal value system. In astudy conducted by Shim & Kotsiopulos^"" to predict theapparel store patronage behaviour, shopping orientation hadthe greatest impact on patronage behaviour. Of the 11
categories of orientations studied, confident shoppingorientation has been selected as these consumers aredescribed as being good clothing shoppers, confident in theirability to choose the right clothing for themselves and had anup-to-date wardrobe. Furthermore, they would buy clothingthey like without hesitation. To suit the needs of theseshoppers the store need to carry more number of private labelbrands.
HI: Level of confident shopping orientation is positivelyrelated to purchase of private labels and its Loyalty
Variety seeking buyer behaviour: Variety seekingbehaviour is an outcome of the desire to seek somethingunique and different from the usual. According toFromkin^^'^', individuals possess a need to feel different fromothers in a social environment. More importantly, individualsvary in terms of the intensity of this uniqueness need. Thosewho do possess a strong desire to be different will search forways to express their uniqueness. One solution is to adoptnew and different products."*" Thus the need for uniqueness inselection of apparel may result in the adoption of differentbrand alternatives due to an assertion of individuality.
Only when there are more alternatives, theopportunity to switch brands will be possible. As the apparelprivate labels throw a variety of alternatives, the customerswill be interested in switching brands. Though varietyseeking behaviour was originally associated with lowinvolvement, frequently purchased product categories havespread its wings to high involvement infrequently purchasedproduct categories like apparels as well. Therefore wehypothesize that if more number of private label brands areavailable, there is a greater likelihood for a customer toexhibit his variety seeking behaviour
H2: Variety seeking behaviour is positively related to thepurchase of private label brands and negatively related to itsloyalty
Attitude towards PLB: Research on private label brandshas focused on customer attitudes towards store brandedproducts and investigated consumer's individual levelpersonality traits affecting such an attitude'^ in order toidentify potential market segments for private labels."'Granzin identified differences among high, medium andnon- users of store brands products for demographiccharacteristics (age, income, children, home ownership, carownership) price/quality emphasis, brand loyalty discountstore patronage and risk taking. Recent researches haveexamined the antecedents and outcomes of generalizedprivate label attitude. Factors that influence store brandattitudes are consumer price consciousness, price-qualityperceptions, 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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between store brands and national brands.''- ^ Attitude is acornerstone of numerous models of consumer behaviour'*l
Attitude can relate to some aspects of consumption(di.scounts, for example), or be more directly connected withan object, whether it is a product, brand or service. It hasdiverse psychological antecedents and is supposed to generatefavourable behavioural responses. It may affect brand loyaltyas thi.s occurs when "favourable beliefs and attitudes exist,and that they are displayed by behaviour of repeatedpurchases". Research work by Burton et al' ' contributed tocorrelating attitude toward private label products withpurchase or purchase intention for private labels. It is alsoaccepted currency that attitude fits around experience.Accordingly, private label loyalty can be fundamentallycorrelated with customers* consumption experience and thuswith satisfaction. Therefore, integration of Private labelattitude will positively affect the strength of the relationshipbetween Private label brand satisfaction and loyalty
H3; Private label brand attitude will positively affect thesatisfaction and the loyalty of private labels
lmpul.se buying tendency: A purchase which is a result ofpredetermined search and is deliberate then it is planned.Contrary to a planned purchase, impulse buying is aspontaneous and immediate purchase ^ where the consumeris not actively looking for a product and has no prior plans topurchase . The purchase is unintended because it is madewhile shopping, although the individual was not activelylooking for that item, had no pre shopping plans to purchasethe item and was not engaged in a shopping task, such aslooking for u gift which the item satisfies. Unintended buyingarises from a sudden urge to buy a specific item whileshopping. It usually occurs after the customer sees theproduct and needs to own or use it.
Unintended and unplanned have long beenassociated with impulse buying and is necessary but notsufficient basis for categorizing a purchase as an impulsepurchase,""' "• " Impulse buying is unrefleciive in that thepurchase is made without engaging in a great deal ofevaluation. Individuals buying on impulse are less likely toconsider the consequences or to think carefully beforemaking the purchase.'^ The person's attention is focused onthe immediate gratification of responding to the urge to buyrather than on solving a pre existing problem or on fmding anitem to fill a predetermined need. Finally, consistent withgeneral impulsiveness, impulsive buying i.s immediate.^^Time interval between seeing the item and buying it is veryshort and the decision to buy is made hastily. An individualmaking an impulse purchase responds quickly to the urge andmakes a spontaneous decision to purchase the item withoutdelay. Furthermore, the individual is not likely to postponethe purchase in order to gather more information, comparisonshop, seek advice. Beyond spontaneity. Rook'" furtherdescribed impulse buying as an intense, exciting urge to buy
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without regard to the consequences of the purchase decision.Beatty and Ferrell^ defined impulse buying as instantaneouspurchase having no previous aim or objective to purchase thecommodity. In apparel purchase, consumers may purchaseprivate labels during the shopping exploration, if theyrecognize its suitability for satisfying a particular need,
H4: Impulse Buying Tendency is positively related to thepurchase of PLB and negatively related to its loyalty
Affective commitment to the store: Affective commitmentand behavioural loyalty are usually considered as keyelements of customer loyalty. Affective commitment isconsidered a necessary condition for customer loyalty.It enables one to differentiate between true customer loyaltyand simple repeat buying. True customer loyalty is based onaffective commitment while repeat buying is not. The latter isbased on inertia. ' True customer loyalty is said to exist whena customer's behavioural loyalty is accompanied with a highaffective commitment.
As a result, affective commitment is considered as anecessary condition for true customer loyalty to occur."Affective commitment involves the desire to maintain arelationship that the customer perceives to be of value. '* Itmainly reflects the nature of relationship between thecustomer and the provider of service and usually thecustomers are motivated to continue their relationship withthe service. Thus, the emotional attachment that affectivecommitment entails translates into strong attitudinal loyaltyboth through the extremity of the attitude (attitude strength)and the extent to which customer is willing to look into aspecific relationship (attitudinal differentiation).'* Thereforeaffective commitment to the store will induce purchase ofprivate labels.
H5: PLB Purchase and Satisfaction with the purchase ispositively related to Affective Commitment to the store andPLB Loyalty.
PLB Loyalty: Satisfaction with PLB leads to repeatedpurchase of that unique brand. Thus greater loyalty createsprofitability for store brands and ultimately to storepatronage. Loyalty is the prime attitudinal objective thatevery marketer/retailer aims for with his marketing/retail mixelements. Loyalty assures a retailer of patronage, of not justconstancy and longevity of his business but creates aneffective competitive advantage and an entry barrier which isdifficult to erode. The concept of store loyalty is derivedfrom brand loyalty concept which refers to the tendency torepeat purchase the same brand. At the Store level, it refers tothe tendency to repeat purchase at the same store for similaror other products.^
H6: Private label brand loyalty is positively related to storepatronage
Store Patronage: Haynes, Pipkin, Black and Cloud'" definepau-onage as how individuals choose an outlet for shopping.
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Store choice and patronage patterns are based on consumer'sperceptions, images and attitudes formed from experiences,information and need. Furthermore, patronage behaviorinvolves a decision process related to where consumers shop,how they shop and what they purchase.
This decision process is often initiated by patronagemotives, which determine why consumers shop and makepurchases at certain retail stores.'''' As stated by Haynes etal'^. the patronage decision process involves three basiccomponents: retailer attributes, consumer characteristics andthe choice context. Store patronage involves the consumer'schoice for a particular retail store." Past retail and marketingstudies have identified several consumer oriented storeattributes (e.g. price, quality, variety, discounts, storereputation) and their relationship to store patronage, but theinfluence of store brands to store patronage has not beenstudied
MethodologyThe data were collected using a survey methodo-
logy. The administrator of the survey personally collected thedata in classrooms at reputed Colleges and from public whopurchase apparels in stores which either sell only privatelabels or have a particular section in the store devoted forprivate labels in Chennai. Respondents were instructed toanswer the questions based on their most recent purchaseexperience. The administrator before administering thesurvey instrument ensured that the respondents understoodthe 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 inChennai. Pre test subjects were asked to complete thequestionnaire based on their most recent purchase experience.Interviews with respondents indicated that the item wordingwas clear and easy to understand. In addition, analyses ofdescriptive statistics indicated no skewness or kurtosis. Scalereliability was performed on each measure. All the measuresexcepting variety seeking behaviour and impulse buyingbehaviour were retained, lmpul.se buying behaviour waschanged from Weun et af^ scale and Variety SeekingBehaviour from Steenkemp and Baumgartner^ toNarasimhan et al' because of low reliability.
Sampling method and procedure: The primary objectiveguiding the sample selection for this study involved finding ahomogeneous group of consumers who prefer to purchaseprivate label brands. A college student sample was selected asthe sampling frame. Therefore, the sampling method can becharacterized as both convenient and purposive.^* The use ofstudent samples in consumer behaviour research has beencriticized because of the debate surrounding whetherthe results obtained can be generalized to the larger
^ ^ 'population.'' ' However, many researchers argue that thedifferences between using student samples versus consumer
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samples are minimal enough to justify using students assubjects.''*' ^' " In addition, researchers argue that studentsamples provide homogeneity and help to control error whenundertaking theory testing.'^' "' Assael and Keon'' demons-trated that the likelihood of measurement model error isinflated by situational factors (e.g. income and education) indiverse samples and can be reduced by using homogeneousrespondents. Therefore, by using a homogeneous sample, alesser degree of external validity was sacrificed for a greaterdegree of internal validity.
Measures: Scales for the independent and the dependentvariables were adopted from the extant literature due to theirrelevance to the study's context and past measurementreliability. Confident shopping orientation was measuredusing Shim and Kotsiopulos ^ scale. Variety SeekingBehaviour and Impulse Buying Behaviour were measured byusing the Narasimhan, Neslin and Sen^' scales.
Richardson et al ^ and Burton et al'^ scales wereused to measure PLB attitude. Affective Commitment wasmeasured using 9 indicators given by De Wulf^\ Theendogenous variable or mediator PLB Loyalty is measuredusing three indicators or scale measures based on Ailawadi etal' . Chowdhury et al'^ scale was used to measure store image.All measures required respondents to evaluate their apparelretail shopping experience across each item on a five-pointLikert-type scale.
Analysis: A two-stage structural equation modeling (SEM)method was used for data analysis. Confirmatory factoranalysis (CFA) was performed to determine whether thescales used to measure the constructs required modification.In addition, reliabilities were assessed on the results of theconfirmatory analytic model. Once the scales wereconfirmed, a SEM was produced.
Structural Equation Modeling: To test our model, wefollowed the structural equation modeling approach.Following Anderson and Gerbing', we followed a 2-stepapproach, first "cleaning up" the measurement model beforeanalyzing the structural model.
Measurement Model: After assessing the individualreliability of the constructs, assessments of the finalmeasurement 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 theBentler-Bonnet Non- Normed Fit Index (NNH) = 0.956.Further, the indicators of residuals. Root mean squareresidual (RMSR) and Root Mean Square Error ofApproximation (RMSEA) were both 0.039.
Structural Model: Chi-square value for the overall model fitwas 833.616 for 314 degrees of freedom (p<O.()OI). Fitindices 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 ShoppingOrientation Fl
T value 4.014Structural co-efficient .238
Affectivecommitmenttowards 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) = .06090% CONHDENCE INTERVAL OF RMSEA (.055, .065)
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Results and DiscussionThus, overall the model can be considered to have a
high level of fit, as most of the fit indices show a good fit forthe model by Hu and Bentler" and {I < x^/df < 5) byWheaton et af^ Moreover, due to the dependency of the y^statistic on the sample size, a higher than cut-off value ofcomparative fit index (CFI) and a value of the ^/df ratiobetween 1 and 5 indicate a good fit.
R for our ultimate dependent variable, theprediction of store patronage was 0.21. R" for Private labelloyalty was 0.995. leading us to conclude that this model doesprovide considerable insight in regard to store patronage.
The path coefficient between confident shoppingimage and PLB Loyalty (H3) is 0.087 (i= -1.059. notsignificant) and the hypothesis was not supported. This resultwas surprising as it is widely believed that confidentshopping orientation leads to PLB loyalty and hence it plays avery important role. No meaningful insights could be drawnas the path coefficient is insignificant and a simulatedexperimental condition with affect priming will help us probeinto the underlying causes.
Variety Seeking Behavior and PLB Loyalty: The path
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coefficient between variety seeking behaviour and PLBLoyalty (H3) is 0.062 (/= .733 p=.Ol) and the hypothesis isnot supported. A consumer with variety seeking behaviourwill 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. Aconsumer with impulse buying tendency will be not be loyal.
PLB Attitude and Affective Commitment towards theStore: PLB attitude and affective commitment towards thestore are positively related to the loyalty of private labels withpath co-efficient between attitude and loyalty being .929 andaffective commitment to the store and loyalty being.238 andtheircorrespondingt values 12.385 and 4.014.
The loyalty of private labels with a path co-efficientof .467 and t-value 8.601 strongly supports our hypothesisthat store patronage is influenced by private label loyalty.
ConclusionThis research has a number of limitations that must
be acknowledged. First, the sample used for this studyconsisted 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 1scores 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 2Structural model results for Store patronage model
Hypothesesnumber
Ml
H2
H4
H3
H5
H6
Hypotheses
Confident shopping orientation
Variety seeking behaviour
Impulse buying behaviour
PLB attitude
Affective commitment towards store
PLB Loyalty
PredictedDirection
+
+
-
+
+
+
ObservedDirection
-
+
+
+
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 3Reliability 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. ofitems
4
2
4
5
8
3
3
Alpha
.772
.590
,829
.778
.903
.801
.847
Table 4Effect decomposition of predictor variables on Store
Patronage
Predictor variables
Confident ShoppingOrientation
VSB
IBB
PLB attitude
Affective commitmenttowards store
PLB U)yalty
Store Patronage
DirectEffect
.467
IndirectEffect
.040
.029
.061
.433
.111
TotalEffect
.040
.029
061
.433
.111
.467
Therefore, these results may not be applicable to the widerpopulation in general. Secondly, the results of this study arelimited to a specialty apparel retail branded purchasingcontext. Lastly, it must be acknowledged that there may benumerous other variables that contribute to the developmentof Store patronage induced by private Iabels.The primaryobjective of this study was to answer the question: "CanPrivate Label brands induce Store Patronage?" The findingsuf the study indicate that private labels can induce loyaltythrough a favourable attitude creation for private labels andan affective commitment towards the store and therebyinducing Store patronage.
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(Received 22'"' December 2009, revised 25'" March 2010.accepted 30'" April 2010)
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