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Journal of Retailing and Consumer Services 11 (2004) 247258

Consumer evaluations of store brands: effects of store image and product attributes
Janjaap Semeijna, Allard C.R. van Rielb,*, A. Beatriz Ambrosinib
b a Faculty of Management Sciences, Open University of The Netherlands, PO Box 2960, Heerlen 6401 DL, The Netherlands Faculty of Economics and Business Administration, Maastricht University, P.O. Box 616, Maastricht 6200 MD, The Netherlands

Abstract The importance of store brands has increased. Many products carrying a label that is exclusively available from a specic retailer chain have been introduced in recent years, with varying degrees of success. Retailers appear to pay little attention to the multiple risks associated with adding new product categories to their store labels. We investigate how store image factors and various categories of perceived risk associated with product attributes affect consumer evaluations of store-branded products. A structural model is developed and tested, providing indications of the likelihood of store brand success in various product categories. Research and managerial implications are provided. r 2003 Elsevier Ltd. All rights reserved.
Keywords: Store brands; Store image; Perceived risk; Retailing; Consumer behavior

1. Introduction The roles and importance of store brands, brands that are exclusive to a particular store chain and compete in several product categories with major manufacturers brands, have changed dramatically over the past decades. Store brands are evolving into full-edged alternatives, capable of competing successfully with these manufacturers brands on quality as well as on price (Quelch and Harding, 1996) and contributing substantially to protability, store differentiation and store loyalty (Corstjens and Lal, 2000). Sales volumes and market shares of store brands, as well as their appeal to consumers have steadily increased (e.g. Dunne and Narasimhan, 1999; Nandan and Dickinson, 1994). Many retailers appear to view themselves increasingly as active marketers of their own store brands, rather than as passive distributors of manufacturers brands (cf. Richardson et al., 1994). Store brands can help retailers attract customer trafc and create loyalty to the store by offering exclusive product lines and premium products (Corstjens and Lal, 2000; Dunne and Narasimhan, 1999). In addition, store brands can help project a
*Corresponding author. Tel.: +31-43-388-3778; fax: +31-43-3884918. E-mail address: a.vanriel@mw.unimaas.nl (A.C.R. van Riel). 0969-6989/$ - see front matter r 2003 Elsevier Ltd. All rights reserved. doi:10.1016/S0969-6989(03)00051-1

lower-price image for retailers, increase their bargaining power over manufacturers and producers of major national brands, and lead to increased control over shelf space (Narasimhan and Wilcox, 1998). Carrying store brands comes with numerous advantages, one of which is the relatively high gross margin, which can be 2550% higher compared to manufacturer brands (Keller, 1993). This high margin mainly results from the more efcient marketing effort, the reduction of middlemen, and economies of scale obtained in distribution. Moreover, they present value to consumers by offering a combination of good quality and bettervalue products, and reinforce the retailers name both on the store shelves and in consumers homes (Fitzell, 1992; Richardson et al., 1996a). Store brands are prominent in supermarkets. For instance, in 1999 they exceeded dollar earnings of manufacturers brands in both food and non-food segments of US supermarkets. According to the Private Label Manufacturers Association (PLMA), one out of ve items sold in American supermarkets, drug store chains and mass merchandisers is sold under a private or store brand. In the UK, the strongest store brand market in Europe, they have a share of nearly 40% of all grocery sales (Steenkamp and Dekimpe, 1997). This implies that some product categories are actually dominated by store brands (Baltas, 1997).

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Some analysts expect that by 2005 close to 50% of all EU grocery sales will be represented by the top ten retailers. Therefore, the cumulative power carried by these retailers and their store brands is signicant (Lepir, 2001). When searching for lower priced alternatives at the lower end of the market, it appears that consumers prefer the guarantee that a familiar store name brings rather than the risks associated with buying from a lesser-known manufacturer brand (Baltas, 1997). Store brands are becoming major brands in their own right with their own identities and quality images. They are increasingly seen as important sources of protability (Ailawadi, 2001; Ailawadi and Harlam, 2002), which explains why many new product lines are being developed for them, and associated marketing efforts have signicantly increased. 1.1. Rationale for the study Supermarket chains have been consolidating their positions through mergers and acquisitions. With fewer and bigger players competing in markets, retailers need to assess their strategies carefully, in order to gain market share. Developing a strong store brand can play an important role in this effort. However, a store brand can be highly successful in some product categories while being ineffective in others (Hoch and Banerji, 1993). Differences among product categories appear to be a cause of variance in store brand share both across markets and across retailers (Batra and Sinha, 2000; Dhar and Hoch, 1997). For retailers, there are multiple risks associated with the introduction of new products under a store label. Store brands are typically umbrella brands, or brands that include various distinct product categories. A negative experience with one product category can prevent consumers from buying store brands in other categories, and even erode customer condence in the store as a whole (Thompson, 1999). The larger the number of categories marketed by an umbrella brand, the more negative the spill-over effects that occur (Sullivan, 1990). Retailers should therefore rst assess the likelihood of acceptance of a new category under the store label. This assessment can be made by investigating consumer evaluations of store brands (Dick et al., 1996; Sethuraman and Cole, 1999) and assessing if and how store related factors (Richardson et al., 1994; Richardson et al., 1996b) and product category attributes (Batra and Sinha, 2000; Raju et al., 2001) affect this evaluation. This paper is based on a study designed to develop a better understanding of the conditions leading to success when a grocery product is made available under a store brand. Based on the ndings, grocery retailers will be able to focus on categories most compatible with their

respective store images. The problem statement guiding this study is: Which factors affect the success of store brands in grocery retailing? The following sub-questions were formulated: (1) How tions (2) How tions do retailer attributes affect consumer evaluaof a store-branded product? do product attributes affect consumer evaluaof store-branded products?

1.2. Approach The article is structured as follows. First, existing literature is reviewed and a number of propositions are derived. These are summarized into a theoretical model. Secondly, the research model and design are shown. A presentation and discussion of the results follows. Next, implications of these results are discussed. Finally, the limitations of the research and some suggestions for further research are presented.

2. Store brands The concept of store brands is often used interchangeably with terms such as private label brands or own brands (cf. DelVecchio, 2001; Dick et al., 1996; Hoch and Banerji, 1993; Raju et al., 2001; Sethuraman and Cole, 1999). The positioning of the brand (e.g. premium, commodity) is a function of many different variables, such as the image of the store, quality of the products, and motivation of the retailer to invest in its promotion (Davies, 1998; Kapferer, 1994). In some cases the store brand is closely associated with the store itself, for instance in the case of Benetton and Gap, where own brands are sold exclusively. In other cases, the store brand is one of many brands available in the store. This situation is typical for most grocery stores. 2.1. Development of propositions How do retailer attributes inuence consumer evaluations of store brands? Although grocery stores are facing problems in differentiating themselves due to the lack of a perceived core product/service and the need to address the broadest possible range of consumers and purchase situations, Dick et al. (1995) observed that the store image acts as an important indicator of store brand quality. Store image is reected in the stores physical environment (Richardson et al., 1996b), perceptions related to its merchandise, and perceived service quality (Baker et al., 1994; Zimmer and Golden, 1988). Consumers use these cues to form an overall evaluation that will affect their attitude toward the store as a whole,

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and potentially towards its store brands. This could explain why store brands outperform manufacturer branded products in some cases. Examples are Harrods with its premium brands, Sainsbury and Tesco with relatively cheap, high-quality product lines, and Aldi with its no-frills stores and a clear focus on basic products at a low price (Fitzell, 1992). Consumers buying decisions will thus be inuenced by their experiences with the retail environment, the merchandise and the level of service: P1: There will be a direct positive relationship between perceived store image and consumer attitudes towards store branded products. In addition to effects of the store image, it has been theorized that perceived product attributes affect the attitude of the consumer towards merchandise sold under a store brand (DelVecchio, 2001). Steenkamp and Dekimpe (1997, p. 927) afrm this by stating that the power of a store brand, even for a powerful retailer, varies dramatically across product categories. These differences have been related to the perceived risks associated with store brand purchases (Mitchell, 2001). By choosing among different brands, and depending on the degree of involvement with each product, consumers make trade-offs between the risks of losses they may incur when purchasing the product and the value they expect. Different authors have categorized the risks associated with the purchase of a product into different groups. Some authors have categorized them into four groups, namely functional or physical, psychosocial, nancial and time related risks (e.g. Greatorex and Mitchell, 1994; Mitchell and Greatorex, 1993). Others employ seven distinct risk types, namely nancial, social, time-, performance, functional, psychological and overall risk (e.g. Stone and Gr^nhaug, 1993). In the case of groceries, functional and physical risks appear to be equivalent: a product that is not compliant with functional (quality) standards could lead to physical damage. In our view, perceived time risk, or the risk that a consumer could waste more time by buying one type of brand rather than another, does not discriminate between manufacturer brands and store brands, and will therefore not be considered in the present discussion. An inclusion of overall risk does not seem to add value, since we are interested in the differential effects of various risk categories. It can be argued that in the case of purchasing groceries psychological risk as dened by Stone and Gr^nhaug (1993) does not play a role. The category of social risk has sufcient psychological aspects to rename it into psychosocial risk. Functional, psychosocial and nancial risks thus remain to be considered, as they appear to discriminate effectively between risks consumers associate with buying manufacturer brands or store brands. In

the following subsections propositions with respect to these effects will be formulated. In addition to the physical performance of the product, functional risk is also related to a consumers perception of how difcult it is to produce a certain product categorythe perceived difculty is based on different aspects, such as required technology and ingredients. Therefore, the difculty of producing a category and the expected quality of the store brand will be inversely related (cf. DelVecchio, 2001): P2: Consumer attitude towards a store branded product is inversely related to the functional risk associated with the perceived difculty for the retailer to produce that product. A stores image does not only serve as a direct indicator of store brand quality, but also as a risk reliever (e.g. Mitchell and Greatorex, 1993; Mitchell and McGoldrick, 1996). The relationship between store image and consumer attitude to a store-branded product can thus be modeled as a mediated relationship. The relationship is mediated by the risk perception, because the risk perception itself is affected by the quality perception of the store (e.g. Baron and Kenny, 1986; MacKinnon et al., 1995; Venkatraman, 1990). As a consequence we expect: P2a: The effect of store image on consumer attitude towards a store branded product is mediated by the functional risk associated with the perceived difculty for the retailer to produce that product. Psychosocial risk is associated with the consumption of the product and its symbolic aspects, such as beliefs and status (Batra and Sinha, 2000; DelVecchio, 2001). Psychosocial risk exists to the extent that the consumer believes that he/she will be negatively evaluated due to his/her product (brand) choice. Nonetheless, not all products are consumed in public situations, that is, other people might not be aware that someone possesses and uses a certain product, when it is not highly visible to others (Bearden and Etzel, 1982). The more visible or publicly used a product category is, the smaller the chance that a consumer will use a store brand, due to its lower level of symbolic quality. Therefore, we expect an inverse relationship between usage visibility of the product (or publicness cf. DelVecchio, 2001) and consumer attitudes towards the store-branded product: P3: Consumer attitudes towards a store branded product are inversely related to the perceived psychosocial risk associated with the usage of the product. Again, the store image could act as a risk reliever and it is expected that the effect of consumers perceptions of the retailer on their evaluations of store-branded

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Antecedents
Store Image -

Mediators
Perceived Psychosocial Risk Perceived Functional Risk Perceived Financial Risk + -

Outcome

3.1. Case studythree grocery stores in The Netherlands For convenience reasons we tested our propositions in the grocery industry in The Netherlands. Store brand penetration is around 20% in this market (Wileman and Jary, 1997) while the three largest grocery chains account for more than 60% of total retail sales (Steenkamp and Dekimpe, 1997). For the present study three major and well-known grocery chains, Albert Heijn (AH), Edah, and Aldi were selected. The three selected chains vary substantially in areas such as the physical design of the stores, the quality and assortment of their merchandise, pricing and promotion strategies. 3.1.1. Albert Heijn AH is owned by the Royal Ahold group, at the time of this study the third largest player in the global retailing industry, operating 30 different chains, consisting of 9000 retail stores in 27 countries. AH is the largest grocery chain in the Netherlands, with more than 2300 outlets and a market share approaching 30% (Dekimpe and Steenkamp, 2002). The stores share an attractive design, offer a broad assortment of quality products and brands, and carry a premium image. The overall price level is higher than at other chains. The AH stores sell approximately 4000 products under a store brandranging from basic products such as milk and toilet paper to more elaborate and premium products, including ready-to-eat meals, gourmet ingredients, and kitchen utensils. All store-branded products include the store name and logo on the packaging. In addition, AH offers the Euroshopper brandbasic, everyday-use products at discounted priceswhich do not carry the store logo. Of the three stores investigated, AH has the largest advertising budget. This advertising is focused on promoting the store image and store brands, and includes a free monthly magazine. 3.1.2. Edah The Edah chain is part of the Laurus group. Laurus operate 1200 outlets in the Netherlands, including the Konmar and Super de Boer stores. The group owns multiple chains in The Netherlands, Belgium and Spain, operating some 2400 grocery outlets altogether. Edahs image is less prestigious than Albert Heijns, and its prices are lower as well, but it is not considered a discount chain. Six hundred products are carried under the Edah private brand, carrying the name and logo of the store. Edahs focus on product innovation is not as accentuated as it is at AH. Nonetheless, the company claims to be similarly concerned with product packaging and presentation. Edah uses various channels to advertise the brand, such as TV, radio, leaets, and newspapers. However, contrary to AH, Edah promotes manufacturer brands in its advertising rather than products with the Edah label.

Evaluation of Store Brand

Store Image

Product Class

Store Brand

Fig. 1. Conceptual model of direct and mediated effects.

products will be mediated by the perceived psychosocial risk: P3a: The relationship between store image and consumer attitude towards a store branded product is mediated by the perceived psychosocial risk of usage. When considerable quality variance occurs within a product category, the likelihood of a consumer making a poor purchase decision increases, and with it the associated nancial risk. The general expectation is that in product categories with large quality variability, store brand labels will appear lower in the quality spectrum (Hoch and Banerji, 1993; DelVecchio, 2001): P4: Consumer attitude towards a store branded product is inversely related to the perceived nancial risk associated with quality variance in the product category. The store image could again act as a risk reliever and it could be expected that the effect of consumers perceptions of the retailer on their evaluations of storebranded products will be mediated by the perceived nancial risk. Therefore: P4a: The relationship between store image and consumer attitude towards a store branded product is mediated by the perceived nancial risk of usage. The hypothesized relationships are summarized in the conceptual model represented in Fig. 1.

3. Research design An experiment was designed and conducted to determine the structural relationships between store image, perceived risk associated with various product attributes, and consumer attitude towards store-branded products. In this section, criteria used for the choice of stores in the study are discussed, followed by a discussion of the criteria used for the choice of product categories. Finally, the methodology is explained.

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3.1.3. Aldi Aldi is a German discount chain, successful in even the most entrenched local markets in Europe (10 countries), which has been expanding more recently into the US and Australia. Aldis objective is offering good quality products at an everyday low price (EDLP). The company pursues a low-cost strategy: investments in store design, staff, or product packaging are kept to a minimum. Aldi also avoids carrying products that duplicate other products, which leads to a relatively narrow assortment. Each Aldi store carries some 1000 different products, with a focus on basic products and not on differentiation and innovation. With the exception of special temporary deals on bulk volumes of particular branded products, the chain carries brands that are uniquely sold at Aldi. However, Aldi tends not to use its own name or logo to identify its brands. Aldi is not known to utilize much advertising in order to promote the store itself. The main media used are newspapers and the store leaet presenting special offers, often more focused on the availability of temporary stock than on discounts. 3.2. Product selection The product categories used in the case study were selected based on availability and familiarity to consumers. The need for variance in the different risks associated with the purchasing decision, functional, nancial and psychosocial risk, guided us in selecting the product categories. Wine, toothpaste, potato chips, and canned tomatoes were chosen. The categories were classied as follows: The wine category was selected to represent the highest psychosocial risk, as it has the highest level of usage visibility; it also reects high functional risk, because of the difculty to produce wine and the physical consequences of the consumption of an inferior wine. It also represents a product category with a very-high-quality variance. Toothpaste carries medium psychosocial risk since it is not often used in public situations; nonetheless, no one wants to be associated with bad/cheap hygiene products. Moreover, it scores high in functional risk because of health related consequences, and there is signicant quality variance in the category. The potato chips category can be classied as inexpensive (low nancial risk), easy to produce (low functional risk) and as having low to medium psychosocial risk. And nally, the canned tomatoes category can be seen as the simplest one with a low level of visibility (psychosocial risk) and very low level of functional riskeasy production and hardly any quality variance among brands. 3.3. Questionnaire design and sampling A questionnaire, consisting of 110 statements, was developed to test the model. Respondents were asked to

indicate their agreement with these statements on 7point Likert type scales (totally disagree to totally agree, very bad to very good, and very unlikely to very likely). The survey consisted of two parts: In the rst part, measuring the store image, respondents had to evaluate the three chains. In the second part, the perceived psychosocial, functional and nancial risks relating to various product categories, and the associated attitudes of the participants towards store-branded products were measured for each of the three chains. For our study, an E-mail message was used to approach potential respondents. An invitation to participate in the experiment was sent to approximately 200 students and 100 recent graduates listed on an e-mailing list of the Marketing Department at the University of Maastricht. The E-mail contained a hyperlink to an online questionnaire. To increase the response rate, a small rafe type lottery was included. To increase the sample size the addressees were asked to forward the invitation to friends and colleagues, thus creating a so-called snowball sample (Stevens et al., 1997). The use of a student-based sample has been proven useful in previous studies regarding branding and consumer behavior (Biswas et al., 1999; Halstead et al., 1994; Sinha and DeSarbo, 1998; Sparks and Hunt, 1998; Stafford, 1998; Van Riel et al., 2001). Students are an important part of the shopping population, prone to buying (the generally cheaper) store brands and can thus be considered experienced with respect to store brand/ manufacturer brand choices. 3.4. Store image Store image was measured with 15 indicator variables, adapted from previous store image studies (Baker et al., 1994; Birtwistle et al., 1999; Bloemer and de Ruyter, 1998; Mazursky and Jacoby, 1986) and a retail service quality research (Dabholkar et al., 1996). In a stepwise principal component factor analysis, 4 items were excluded from the subsequent analysis, based on low commonality values (o0.35). The remaining items, as well as the associated factor loadings, are listed in Table 6 in the appendix. Based upon the interpretation of the Scree test, three factors were identied, explaining 70% of the variance. A value of 0.904 was found for the KMO test and for Bartletts test we obtained a w2 of 7519.774 (df.=45, s=0.000). Reliability was tested with Cronbachs test and reported in Table 6 in the appendix. 3.5. Dependent variable The dependent variable, consumer attitude towards the store brand, was operationalized in accordance with previous studies in branding research (Aaker and Keller, 1990; Van Riel et al., 2001), by averaging two measures: the perceived overall quality of the store brand

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(1=inferior, 7=superior) and the likelihood of purchasing the store brand, assuming that the customer was planning a purchase in the product category (1=not at all likely, 7=very likely). For this variable, a reliability coefcient a of 0.87 was obtained. 3.6. Risk factors Since each of the risk factors had to be measured for four products and for three different store brands, it was decided to operationalize them as straightforward, single item measures. The participants were asked to express their agreement with statements such as Albert Heijn would have problems to manufacture this product, or I would mind that other people know that I use this product from the Edah brand on seven point Likert scales. In a pretest of the questionnaire the questions were reformulated such as to convey the intended meaning optimally. 3.7. Sampling One hundred and thirty-one participants lled out the questionnaire. Data were screened manually and 3 cases were deleted from the sample, since they contained a large number of missing values. Each respondent answered questions about three different stores and four different product categories, which resulted in a factorial design of 1536 cases (3 4 128). The respondents included 61 females and 67 males. The average age was between 20 and 24 years old68.1% of the respondents were in this age range. In addition, 8.8% of the respondents were between 15 and 19 years old, 15.9% between 25 and 29 years, 1.8% between 30 and 34 years, and nally 5.3% of the sample was older than 34 years.

RFUN g2 b7 IL b8 IM b9 IS e2 ; RPSY g3 b10 IL b11 IM b12 IS e3 ; RFIN g3 b13 IL b14 IM b15 IS e4 ;

2 3 4

4. Analysis and results 4.1. Testing the propositions The theoretical model to be tested can be represented by the following set of equations: Y g1 b1 IL b2 IM b3 IS b4 RFUN b5 RPSY b6 RFIN e1 ;
Table 1 Descriptives Store Brand Attitude (SBA)/Image Factors Retailer SBA Mean AH Edah Aldi 4.77 4.20 4.21 SD 1.44 1.46 1.63 Layout Mean 5.7 4.6 3.6 SD 0.92 1.02 1.23

where the variables are: Y is the consumer attitude towards the store brand; IL the store image (layout); IM the store image (merchandise); IS the store image (service); RFUN the functional risk; RPSY the psychosocial risk; RFIN the nancial risk; b the regression coefcients; g the intercepts; and e is the error terms. Before conducting the regressions following Eq. (1) the data were investigated on a descriptive level. Selected descriptives are reported in Table 1. It appears that AH has the best and most consistent store image among participants: AH is followed by Edah and nally by Aldi. A look at the means of consumers attitudes towards the store brand reveals that although AH attained the highest level, Edah and Aldi are at similar levels. These differences are clearly less pronounced than the ones between the different store images. From Table 1 it became clear that the retailer sample is not homogeneous. It was therefore decided to create correlation matrices for the three retailers separately, including all core constructs, with the primary purpose of obtaining insight in the data structure. These matrices are presented in Table 2. Signicant correlations exist between most of the variables, the highest level being between attitude towards the store brand and perceived nancial risk in the AH and Edah samples, and between attitude towards the store brand and store image in the Aldi Sample. This observation is an indication that it may not be allowed to pool the data for the three retailers. Before any further techniques could be applied, parameter stability over the three store brands had to be veried. F -tests (Chow, 1960) were thus applied to regressions according to model (1) of various combinations of the three partial samples. For that purpose, two dummy variables were introduced with the following values: D1 1 : Albert Heijn and D1 0 : not-AlbertHeijn D2 1 : Edah and D2 0 : not-Edah If D1 0 and D2 0 : Aldi:

Merchandise Mean 6.1 4.8 3.4 SD 0.91 1.07 1.22

Service Mean 5.3 4.6 4.0 SD 0.96 1.03 1.15

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J. Semeijn et al. / Journal of Retailing and Consumer Services 11 (2004) 247258 Layout 0.363 0.409 0.340 Merchandise 0.430 0.663 0.380 0.570 0.382 0.596 Service 0.276 0.521 0.580 0.395 0.544 0.573 0.295 0.453 0.518 Functional 0.358 0.152 0.056 0.069 0.319 0.081 0.060 0.161 0.178 0.099 0.002 0.019 Psychosocial 0.291 0.243 0.260 0.192 0.021 0.264 0.367 0.281 0.240 0.011 0.244 0.352 0.212 0.225 0.116 Financial 0.479 0.140 0.132 0.030 0.163 0.203 0.498 0.126 0.132 0.105 0.256 0.049 0.351 0.091 0.129 0.120 0.056 0.080 PSY 253

The new model becomes: Y g1 g2 D1 g3 D2 a1 D1 IL a2 D2 IL a3 D1 IM a4 D2 IM a5 D1 IS a6 D2 IS b1 IL b2 IM b3 IS a7 D1 RFUN a8 D2 RFUN b4 RFUN a9 D1 RPSY a10 D2 RPSY b6 RPSY a11 D1 RFIN a12 D2 RFIN b7 RFIN e: 5 This equation is automatically reduced to Eq. (1) if both D1 0 and D2 0; turns into Eq. (6) if D1 1; and into Eq. (7) if D2 1: Y g1 g2 g3 b1 a1 IL b2 a3 IM b3 a5 IS b4 a7 RFUN b5 a9 RPSY b6 a11 RFIN e; Y g1 g2 g3 b1 a2 IL b2 a4 IM b3 a6 IS b4 a8 RFUN b5 a10 RPSY b6 a12 RFIN e: 7 If there are no differences between the stores, this implies that a1 a2 a3 a4 a5 a6 a7 a8 0: This is our H0 : We can test this hypothesis with the Chow test statistic, dened as RSSp RSS1 RSS2 =k : 8 RSS1 RSS2 =n1 n2 2k This statistic has an F distribution with (k; n1 n2 2k) degrees of freedom. RSSP equals the Residual Sum of Squares of the OLS regression on the pooled sample, RSS1 equals the Residual Sum of Squares of the regression on sample A and RSS2 equals the Residual Sum of Squares of sample B; where A and B represent the respective partial samples. Parameters n1 and n2 equal the number of observations in each partial sample, and k is the number of parameters. A Chow test was rst conducted on the pooled sample of AH and Edah. An F -value of 2.74 was obtained. This value is larger than 2.01, the cut-off value of F0:05;7;1040 : Therefore H0 ; stating homogeneity of the pooled sample (AH-Edah) was not accepted. Furthermore a Chow test was conducted on the pooled sample on the one hand, and Aldi on the other. The F -value we obtained, 8.92, was again higher than 2.01, the cut-off value of F0:05;7;1549 : This implied the rejection of H0 for the pooled sample of AH and Edah on the one hand and Aldi on the other. The regressions and mediation tests were thus performed separately for the three retailers in order to tests the propositions. To investigate Propositions P1, P2, P3 and P4, regression analyses were performed: attitude towards the store brand was regressed on the main variables, the store image factors layout, merchandise and service, as well as the perceived risks associated with purchasing different product categories: functional risk, psychosocial risk and nancial 6

FUN

PSY SBA

Aldi

LAY

MER

SER

FUN

SBA=store brand attitude, correlation is signicant at the 0.05 level, correlation is signicant at the 0.01 level.

Edah Table 2 Correlation matrices for the three retailers Albert Heijn Retailer

SBA

LAY

MER

SER

FUN

PSY

SBA

LAY

MER

SER

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254 J. Semeijn et al. / Journal of Retailing and Consumer Services 11 (2004) 247258 Table 3 Results of the analyses: direct effects Retailer Albert Heijn Adj. R 0:402; F 59:617; N 517 Independent variables b (B) Constant Layout Merchandise Service Functional risk Psychosocial risk Financial risk 3.728 0.010 0.240 0.022 0.297 0.114 0.373 t 7.324 0.258 5.824 0.582 8.266 3.285 10.617 s 0.000 0.797 0.000 0.561 0.000 0.001 0.000
2

Edah Adj. R 0:410; F 61:429; N 516 b (B) 3.497 0.150 0.104 0.132 0.183 0.117 0.401 t 9.113 3.615 2.518 3.202 5.021 3.307 11.353 s 0.000 0.000 0.012 0.001 0.000 0.001 0.000
2

Aldi Adj. R2 0:306; F 38:876; N 510 b (B) 3.842 0.138 0.197 0.090 0.165 0.162 0.299 t 10.835 3.045 4.310 2.182 4.429 4.249 8.105 s 0.000 0.002 0.000 0.003 0.000 0.000 0.000

risk. The results of these regressions are summarized in Table 3. 4.2. Attitude towards the store brand Our rst proposition stated a direct, positive and linear relationship between store image and attitude towards the store brand. Three store image factors were measured. The correlations found in our data (see Table 2) as well as the mostly signicant regression parameters found (see Table 3) conrm the proposition for the three factors and the three retailers to different degrees. Results for Edah and Aldi conrmed the proposition for all three factors. Surprising was the absence of signicant effects for layout and service in the case of AH, while the merchandise factor did show the expected effect. Hence, it can be concluded that store image perceptions inuence consumers judgment of store brand quality in a positive sense, albeit to different degrees for different retailers, and Proposition P1 is therefore supported by the data. The more highly a consumer thinks of a store the more positively he/she will evaluate store-branded products. 4.3. Product attributes and associated risks Proposition P2 was concerned with the effect of perceived functional risk. A negative relationship was expected between the functional risk associated with a specic product category and attitude towards that product category carrying a store brand. Support for the existence of this relationship, in the form of the highly signicant regression parameters (see Table 3), was found for the three retailers and Proposition P2 was thus conrmed. Proposition P3 predicted an inverted relationship between the perceived psychosocial risk associated with using a product and the attitude towards that product carrying the store brand. Support for the existence of this relationship, in the form of the highly signicant regression parameters (see Table 3), was again found

and Proposition P3 was thus also conrmed for all three retailers. Proposition P4 predicted a negative relationship between the perceived nancial risk associated with purchasing a product in a category with large quality variance, and the attitude of the consumer towards products in that category carrying a store brand. A strong and signicant regression coefcient was found for all retailers, which conrms Proposition P4. To test the predicted mediation effects (Baron and Kenny, 1986), hypothesized in P2a, P3a and P4a, Sobel tests were conducted (MacKinnon and Dwyer, 1993; MacKinnon et al., 1995; Sobel, 1982) on the factors obtained for the independent variable (IV), the DV and for the mediators. The test statistic Z was calculated according to the following formula: ab Z q: 2 2 2 2 b2 s 2 a a sb sa sb 9

In this equation, a represents the unstandardized path coefcient of a regression of the IV (store image) on the mediator (risk perception), b and c the unstandardized path coefcients of a regression of the mediator and the IV on the DV (consumer attitude). An overview of the Sobel Tests performed to assess the data for mediation is presented in Table 4. Based on the above, the original conceptual model was adapted. The adapted model is presented in Fig. 2. The new model explains a number of predicted effects. Many terms were found signicant and displayed the expected signs. The variables with the largest direct effects on consumers attitude towards the store brand were store image and nancial risk. A summary of the propositions and their status is presented in Table 5.

5. Conclusion and implications The purpose of this study was to explore the combined effects of retailer and product attributes on

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J. Semeijn et al. / Journal of Retailing and Consumer Services 11 (2004) 247258 Table 4 Mediating effects of store image factors on perceived risk factors (Z -values) Retailer: Albert Heijn Functional Layout Merchandise Service + 3.70 + Psychosocial + 2.82 + Financial + NS + Edah Functional 3.54 3.10 5.03 Psychosocial 4.19 3.58 2.99 Financial NS NS NS Aldi Functional NS 1.93 NS Psychosocial 4.14 2.33 2.09 Financial NS NS NS 255

+=no effect expected, NS=not signicant, effect is signicant at the 0.05 level, effect is signicant at the 0.01 level.

Antecedents
Physical Layout Merchandise -

Mediators
Perceived Psychosocial Risk -

Outcome

5.2. Product attributes and related risks In previous studies, several product attributes have been identied as antecedents of store brand success in specic product categories (DelVecchio, 2001): Complexity, quality variance, and visibility. In the present study, these product attributes have been related to risks to the consumer when purchasing a store brand product. A negative effect of the perceived risks on consumers evaluations of products sold under a store brand was predicted. It was also hypothesized that some risks can be relieved by the perceived store image. 5.2.1. Product complexity and functional risk Product complexity was associated with perceived functional risks of the product and measured as the perceived difculty for the store to manufacture it, as a result of required specialized technological knowledge and ingredients. It was observed that the less likely the consumer perceives a certain retailer to be able to produce a specic product, the more likely it is that the consumer develops a negative attitude towards such a product carrying that retailers store brand. From the study it became clear that all retailers were able to neutralize some of the functional risk with their store image, albeit to different degrees. Clearly the Aldi store image has little inuence on perceived functional risk. 5.2.2. Visibility of product usage and psychosocial risk Our research conrmed that public usage of a product reduces the chance that consumers will buy a store brand, due to the lack of (symbolic) quality. In product categories where risk of public exposure of the product is an important issue, a manufacturers brand will often outperform a store brand. All three retailers are able to neutralize psychosocial risk by their store images. 5.2.3. Quality variance and nancial risk Quality variance within a product category was expected to be positively related to the perceived risk of choosing a low quality product and therefore of losing money. Strong support is present in the data for the view that perceived quality variance within a category is related to a negative evaluation of storebranded products in that category. This nding leads to

+ Perceived Functional Risk + Evaluation of Store Brand

+ Service Perceived Financial Risk -

Store Image

Product Class

Store Brand

Fig. 2. Revised model based on empirical observations.

consumer attitude towards store-branded products in grocery stores, and to make recommendations with respect to the most appropriate product categories for new product introduction. Effects for store image and three product attributes were hypothesized. The effects were measured in an empirical study including two general grocery stores and a discount store. 5.1. Store image and quality Differing store image perceptions across chains are a consequence of diversity in retail strategy, store design and commitment to serving customers needs. Based on previous research (Richardson et al., 1994, 1996b), a strong relationship was expected between store image and attitude towards the store brand. Direct and mediated effects were hypothesized. Three store image factors were considered: layout, merchandise and service. Direct effects of all three factors were observed for two out of three retailers. In the case of AH no signicant direct effects were found for Layout and Service, although associated correlations suggested these effects. In the case of AH, the effect of merchandise was stronger than in the case of the two other retailers, however. Store image can therefore be considered an important predictor of attitude towards a store brand.

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256 Table 5 Status of the propositions No. Proposition Proposition status Albert Heijn 1 2 2a There will be a direct positive relationship between perceived store image and consumer attitude towards store branded products. Consumer attitude towards a store branded product is inversely related to the functional risk associated with the perceived difculty for the retailer to produce that product. The effect of store image on consumer attitude towards a store branded product is mediated by the functional risk associated with the perceived difculty for the retailer to produce that product. Consumer attitudes towards a store branded product are inversely related to the perceived psychosocial risk associated with the usage of that product. The relationship between store image and consumer attitude towards a store branded product is mediated by the perceived psychosocial risk of usage. Consumer attitude towards a store branded product is inversely related to the perceived nancial risk associated with quality variance in the product category. The effect of store image on consumer attitude towards a store branded product is mediated by the nancial risk associated with the perceived difculty for the retailer to produce that product. | | | Edah | | | Aldi | | (|) J. Semeijn et al. / Journal of Retailing and Consumer Services 11 (2004) 247258

3 3a 4 4a

| | |

| | |

| | |

the conclusion that when quality variance within a product category is high, it is likely that consumers will choose manufacturer branded products over store brands, to reduce the nancial risks associated with that purchase. None of the store image factors was able to relieve this risk. 5.3. Implications More and more products, including grocery products, are perceived as commodities. This adds to the interest in, and importance of store brand research. The appeal of manufacturers brands may wane when consumers become increasingly well informed about products with a commodity-like nature. Renewed interest on the part of manufacturers to produce for store brands is therefore likely (Corstjens and Lal, 2000; Steenkamp and Dekimpe, 1997). The role of supermarkets and grocery stores is currently evolving to one of principally servicefocused providers. Providing One-Stop Shopping service creates an obvious benet to consumers (Semeijn and Vellenga, 1995). Offering an increasing variety of store-certied goods, with clear labeling, would be part of such a service. The reduction of risk, the building of trust, and the time savings afforded to hurried consumers will likely contribute to store loyalty (Dick et al., 1996). The ndings of this study have implications for decision-makers in the grocery business. It is critical that protable new product opportunities can be identied, by investigating the circumstances in which product categories will be benecial to a store brand assortment (Ailawadi, 2001; Raju et al., 2001). The present study has provided some new insights into this matter. New store brand products have greatest

potential in product categories associated with low functional, psychosocial and nancial risk. Conversely, products in a category with large quality variance and high public visibility are more likely to fail. Dhar and Hoch (1997) point to the fact that retailers can take the lead in the further development of store brands. The present study conrms that developing, nourishing and sustaining a store image can create opportunities to achieve differentiation and positioning relative to other chains and sell protable store brands. Retailers should therefore focus on aspects, such as store environment, merchandise quality and value, and customer service. 5.4. Limitations and suggestions for further research The analysis was based on data collected about four product categories that were available from three retailers, evaluated by a select group of consumers, and collected through a questionnaire that was administered on-line. It would be valuable to further test the model with data from more retailers in different (international) markets, with a wider range of product categories, or in different sectors, and to include more consumer-level variables, as previously suggested by Batra and Sinha (2000). An analysis of heavy store brand users and a comparison of brand pairs (manufacturers and store brands) have also been suggested (Ailawadi, 2001; Raju et al., 2001). In the present study signicant differences were found between the three retailers. This points at the fact that the resulting model is not complete. An attempt to distinguish conceptually between explicitly branded (as in the case of AH and Edah) and un-branded store labels (as in the case of Aldi), or between private labels

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J. Semeijn et al. / Journal of Retailing and Consumer Services 11 (2004) 247258 Table 6 Composition of store image factors (factor loadings)
Item Layout Merchandise Service a 0:70 a 0:82 a 0:78

257

Physical facilities are visually appealing 0.78 Store layout is clear 0.86 Easy to nd articles in promotion 0.74 Merchandise is available when needed Store offers high quality merchandise Store offers broad assortment Employees are knowledgeable Employees are courteous No problems when returning items Employees willing to nd custom solutions Store has convenient opening hours

0.83 0.87 0.88 0.75 0.81 0.68 0.75 0.66

and store brands could be a rst step to further improve understanding of consumer evaluations of store brands. Furthermore, no individual propositions were developed for the effects of the different store image factors on the various categories of perceived risk. A better understanding of the effects of the various store image factors could lead to a greater strategic consistency and better resource allocation decisions.

Acknowledgements The authors wish to express their gratitude to the editor and the anonymous reviewers for providing them with helpful comments and invaluable suggestions for improvements.

Appendix Composition of store image factors (factor loadings) is given in Table 6.

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