The Impact of Private Label Introduction on Assortment, Prices, and Profits of Retailers

Abstract

We study how introducing private‐label brands (PLs) affects retail prices and profits, accounting for assortment adjustments of national brands (NBs). We employ an event‐study framework and scanner data on the US beef market. When a PL is added to the low‐priced market segment, we find that retail stores further differentiate NBs from the PL and remove same‐segment NBs. When a PL is added to the high‐priced segment, however, NB assortment changes are limited. PL introduction and PL‐driven NB assortment changes impose small price effects on NB, but strongly cannibalize NB demand and steer consumers toward PLs, likely increasing store profits.