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SEGMENTING PRIVATE LABEL SHOPPERS:

AN EMPIRICAL STUDY
Shahir Bhatt*, Amola Bhatt**

Abstract:  Rationale: Private brands were once a small part of retailers’ merchandise, however today they are becoming a significant
factor for most retail operations. It has also been found that major studies in private labels emphasize on the grocery sector. Apparel sector is
on the edge of growth in domestic and global markets due to liberalisation. Very few studies have been conducted using multivariate analysis
(cluster analysis) for studying the segments of shoppers for an apparel retail store, and so the present study is undertaken to better understand
the consumer perceptions.

Purpose: The study indicates the segments of private label shoppers and its association with frequency of usage and the store from which they
are purchased.

Design/methodology/approach: Data are collected using a self-administered questionnaire. The sample size for the study is 608 respondents.
Analysis has been done by using multivariate techniques (cluster analysis) followed by Chi Square.

Findings: Four segments of private label shoppers were brought out from the study, which included Quality Conscious Shoppers, High
Expectation Seekers, Apathetic Shoppers, and Impression Oriented Shoppers. Additionally, it was inferred from the study that there exists some
association between the segments and frequency of purchase and the store selected.

Research limitations/implications: A key limitation of this study is the sampling frame. Future studies should replicate this study in different
context.

Keywords: Retail, Private Labels, Segmentation

INTRODUCTION the following definition for private labels: “Private label

products encompass all merchandise sold under the retailers’
The Indian retail market has undergone tremendous changes brand. The brand can be retailer’s own name or a name
in the last two decades. The Boston Consulting Group and created exclusively by the retailer. In some cases, a retailer
Retailers Association of India published a report titled, may belong to a wholesaler group that owns the brands that
‘Retail 2020: Retrospect, Reinvent, Rewrite’, highlighting are available only to the members of the group.” Private
that India’s retail market is expected to nearly double from label brands (PLB) are also called as store brands (SB) or
US$ 600 billion in 2015 to US$ 1 trillion by 2020, driven own brands.
by income growth, urbanisation and attitudinal shifts. As per
Indian Brand Equity Forum (IBEF, 2016) the retail market The success of private brands penetration is directly
in India will reach USD1.3 trillion by 2020 from USD600 connected to the growth of modern retailing. Private label’s
billion in 2015. Apart from food and grocery, apparel is share in the modern retail in India is about 7%, but it is as
expected to grow by 9 to 10 percent year on year, for the next high as 40% in European countries, and as low as less than
five years. Apparel shopping consists of shopping for men’s 1% in China and hence, private labels have a big role to
wear, boys’ wear, women’s wear, children’s wear, girls’ play. As per Euromonitor 2012; margins on private labelled
wear, infants’ wear, general clothing businesses, footwear, apparel ranges from 30-50%, and hence even e-commerce
leather products, and travel goods (Guy, 1998). players have started introducing their own private label
brands.
In the era of hyper competition, retailers are coming up
with strategies to lure their customers. One such strategy
implemented by companies across all categories is the
LITERATURE REVIEW
introduction of private labels (PL). The Private Label
The earliest study on private label brands goes all the way
Manufacturers Association (2010) provides on its website
back to 60’s (Food Commission report, 1966; Stern, 1966)

* Assistant Professor, Institute of Management, Nirma University, Ahmedabad, Gujarat, India. Email: shahir@nirmauni.ac.in
**
Assistant Professor, Institute of Management, Nirma University, Ahmedabad, Gujarat, India. Email: amola@nirmauni.ac.in
 Segmenting Private Label Shoppers: An Empirical Study  31

as they were among the first to address the importance of sales proneness (Jin & Suh, 2005). Lichtenstein et al. (1993)
private label brands and their strategic relevance from the defined price mavenism as “the degree to which an individual
retailers point of view. Later studies focused on demographic, is a source for price information for many kinds of products
psychographic and behavioural characteristics of store brand and places to shop for the lowest prices, initiates discussion
consumers (Myers, 1967; Bellizzi, Krueckeberg, Hamilton, with consumers, and responds to request from consumers
& Martin, 1981). Nair (2011) mentioned that private label for market place price information.” Lichtenstein et al.
which initially used to cater to a specific segment that was (1993) defined price sensitivity as “favourable perceptions
price conscious but not quality conscious; now segments of the price are based on feelings of prominences and
urban youth due to their lifestyle and growing fashion status that higher prices signal to other people about the
awareness. The following variables have been identified purchaser.”Bhatt and Bhatt (2015) have also identified the
from the literature which makes up the perception of private dimensions of price namely price consciousness, prestige
brands in the mind of the customer. sensitivity, sale proneness, price mavenism, and value
consciousness.
Quality
Proximity
Improved quality is credited throughout the marketing
literature as a major reason for the growing acceptance of Though it may sound very elementary, but this closeness
PLs. Omar (1994) conducted a quality test for private label factor is the most important in influencing the self-perception
brands and national brands across three product categories. of consumers as the mean of this factor is the highest.
The result showed that consumers did not find any difference Consumers who usually buy SBs (store brands) perceive
among brands during a blind taste test but revealed taste these brands to be suitable for “people like me.” Shoppers
test indicated superior ratings to national brands. Abhishek who are closer to these brands will be more confident in
and Abraham (2008) found out through their research that obtaining satisfactory performance with them (Bhatt, 2014).
the gap in quality of private label and national brands is
narrowing with the time as retailers are emphasizing more
on quality. According to them the retailers have started Brand Loyalty
providing depth in the product category in terms of size,
colours, packaging, style, design, features, and other According to Mc Goldrick (2002), private label brand
product attributes. Consumers who believe in price and manufacturers have faced a long time problem to create an
quality relationship probably depend on brand names and image of brand loyalty towards private labels. This is because
engage in price seeking behaviour (Tellis & Gaeth, 1990). the number of retailers in the current scenario is increasing
Bhatt and Bhatt (2015) explained that intrinsic cues (product tremendously. East et al. (1997) said that consumers usually
ingredients) are more important in comparison to extrinsic build positive attitude towards a store and its brands through
cues (brand name, store name, price, and packaging). their loyal behaviour. Regarding store brand loyalty, prior
studies on this topic tested the negative influence of brand
loyalty (in general) on SB perceptions and purchasing
Price (Baltas, 1997; Burton, 1998; Garretson, Fisher, & Burton.,
2002). The study by Bhatt (2014) confirmed that store brand
Price consciousness is the degree to which consumers use fidelity had a demonstrable impact on SB purchase.
price in its negative role as a decision-making criterion
(Lichtenstein, Peter & William, 1988). Burton (1998)
and Ailawadi, Neslin, and Gendenk (2001) also show Risk Aversion
that consumers who tend to pay low prices have a more
favourable attitude towards buying PLBs. Lichtenstein, Bettman (1973) finds variables reflecting lower perceived
Ridgway, and Netmeyer (1993) define value consciousness risk and greater information to be associated with store
as “a concern for price paid relative to quality received.” It brand perceptions. Livesey and Lennon (1978) highlight the
implies consideration of quality not in absolute terms, but importance of consumer experience with store brands and
in relations to the price of a particular brand (Jin & Suh, perceived risk. Majority of studies have cited that perceived
2005). Lichtenstein et al. (1993) defined sale proneness risk is higher in case of private labels, but contrasting finding
as “an increased propensity to respond to a purchase offer has emerged out in this study by Bhatt (2013). A study
because the sale in which the price is presented positively conducted by Dunn, Murphy, and Skelly (1986) also finds
affects purchase evaluations.” Those consumers who view that PLBs are least risky on financial measures; however,
price as what they give up for the product might exhibit social risk is less important for supermarket products
generally.
32  International Journal on Customer Relations Volume 4 Issue 2 September 2016

Serviceability OBJECTIVE
Customer’s perception of service quality can generally be ∑∑ To segment the consumers on the basis of factors
divided into the perception of reliability, responsiveness, affecting their perceptions towards private labels
assurance, empathy and tangibles. Service ability, as the (identified from the literature).
factor comprises statements related to warranty (after sales ∑∑ To identify whether there is any relationship between
service), good service offered by the stores and whether the segments brought out of the study and store selected
consumers can buy private brands online (Bhatt, 2014). for purchase of private labels.
∑∑ To identify whether there is any relationship between
Corporate Image the segments brought out of the study and frequency
of purchase.
The corporate image of a store is defined as a combination
of the store as a brand, and the selection of store brands and HYPOTHESIS
manufacturer brands offered by the store (Grewal, Monroe,
& Krishnan, 1998). A strong relationship between retail ∑∑ H0: There is no association between the different
store image and the image of its PLB is considered to be types of shoppers and the store selected for purchasing
a “fundamental requirement for a successful differentiation private labels
strategy” (Collins-Dodd & Lindley, 2003, p. 2). Research ∑∑ There is no association between the different types of
has also demonstrated that brands with a better image are shoppers and the frequency of shopping
chosen than those with a less positive image (Kwon, 1990).
Pitta and Kutsanis (1995) have exhibited that a positive
image of a brand differentiates the brand in the consumer’s RESEARCH METHODOLOGY
mind, and in turn helps enhance the brand equity. While The research design for the study is descriptive in nature
the management of a department store focuses on ways to and the sampling unit comprised consumers who were
increase their PLB equity, a possible solution is to focus on aware of private labels of major apparel formats located
factors that enhance the PLB image. in Ahmedabad (Pantaloon, Westside, Globus, Big-Bazar),
Baroda (Pantaloon, Westside, Big-Bazaar), Surat (Pantaloon,
RATIONALE Westside, Big-Bazar) of Gujarat state. The questionnaire
constructed for the study included several questions which
Private brands which were once a small part of retailers were continuous and categorical in nature. A scale was
merchandise, are occupying a significant pie-share of most constructed with five point Likert type statements in which
retail operations today. Literature cites that price, quality, respondents were asked to indicate their level of agreement
proximity, serviceability, store image, brand positioning, risk (1 = strongly agree to 5 = strongly disagree).
aversion etc. are the variables which the consumers take into
account while building perceptions towards private labels. It
has been studied that the people of Gujarat are very much price General Consumer Perceptions
conscious. It has also been found that major studies in private
labels emphasize on the grocery sector (Garretson et al., 2002; For general consumer perceptions, scale was constructed
Burton et al., 1998; Putsis & Dhar, 2001; Sethuraman, 1996; exhibiting consumer characteristics, multiple items were
Narsimhan & Wilcox, 1998; Batra & Sinha, 2000; Richardson taken from Ailawadi et al. (2001), Batra and Sinha (2000),
et al., 1996). Clothes are generally a higher involvement and Lichtenstein et al. (1993), Jin and Suh (2005), and revised
higher ticket product than grocery items. Besides, clothes to fit the Indian context. However, for price and quality, two
are considered to have more ‘experience’ characteristics separate scales were constructed which are discussed below
(Erdem & Swait, 1998) because consumers rely on how the in details.
clothes fit, how it feels, how it looks on them when worn,
and expectation of how it would withstand the wear and tear
Quality Related Perceptions
of use. Apparel sector is experiencing continuous boom in
domestic and global markets due to liberalisation. Hence, it For quality related perceptions, scale was constructed
makes sense to study the growth and contribution of private comprising both cues (extrinsic and intrinsic). Items were
labels in the apparel sector. Further, very few studies have taken from a study by Richardson, Jain and Dick (1994),
been conducted using multivariate analysis (cluster analysis) in which they have examined the relative importance of
for studying the segments of shoppers for an apparel retail extrinsic verses intrinsic cues in determining the perceptions
store, and so the study is undertaken to better understand the of store brand quality.
consumer perceptions.
 Segmenting Private Label Shoppers: An Empirical Study  33

Price Related Perceptions Table 1: Final Cluster Centres

For price related perceptions, scale was constructed comprising   Cluster

of multiple items which were derived from Patel (2010), Jin et
  1 2 3 4
al. (2003), Baltas (1997), and Rao and Monroe (1989).
(n=194) (n=161) (n=46) (n=207)
The final study involved a survey conducted in Ahmedabad, Quality Indicators 4 4 3 3
Baroda, and Surat between December 2013 and April 2014.
Price Indicators 3 4 3 3
The sampling technique used for the study was cluster
followed by stratified sampling through mall intercept Proximity 4 4 2 3
method. Responses were obtained from 608 respondents. Private Brand Loy- 2 3 2 3
The data was coded using SPSS 17 and statistical techniques alty
including cluster analysis followed by Chi-Square test were
Risk Aversion 3 4 3 3
used for the purpose of analysis.
Serviceability 3 4 3 3
DATA ANALYSIS Corporate Image 3 4 3 4
Source: Primary data collected through questionnaire
A cluster analysis was run on 608 cases, each responding to
the factors influencing consumer perceptions of private labels (Mean values were computed on the basis of 5-point scale
in apparels, viz. quality indicators, price indicators, proximity, 1- Strongly Disagree, 5- Strongly Agree)
private brand loyalty, risk aversion, serviceability, and
corporate image, which have been derived from the literature, Table 2: ANOVA
as indicated in the earlier section of the paper. A hierarchical
cluster analysis using Ward’s method produced four clusters,
  Cluster Error
between which the variables were significantly different.
According to distance coefficients from the agglomeration   Mean Mean
schedule and dendrogram, the researchers can say that a four- Square Df Square Df F Sig.
cluster solution was found to be most appropriate. Quality 16.911 3 0.237 604 71.425 0.00
ANOVA test (Table 2) indicated that all seven factors Indicators
contributed to differentiating the four clusters (p<0.001). Price Indica- 10.479 3 0.222 604 47.185 0.00
Tables present results of cluster analysis for the four clusters. tors
The four groups of shoppers can be named as Quality Proximity 48.767 3 0.226 604 215.741 0.00
Conscious Shoppers, High Expectation Seekers, Apathetic Private 48.411 3 0.316 604 153.314 0.00
Shoppers, and Impression Oriented Shoppers. Brand Loy-
alty
Risk Aver- 21.872 3 0.263 604 83.053 0.00
sion
Service- 26.892 3 0.278 604 96.886 0.00
ability

Table 3: Demographic Profiles of Segments

Quality Conscious High Expectation Apathetic Shoppers Impression Oriented

Shoppers Seekers (Segment 3) Shoppers
(Segment 1) (%) (Segment 2) (%) (%) (Segment 4) (%)
Gender Male 62.37 64.59 63.04 61.3
Female 37.62 35.40 36.9 38.64
Marital Status Married 39.69 35.40 41.30 32.36
Unmarried 60.30 64.59 58.6 67.63
E d u c a t i o n Undergraduate 9.71 9.31 6.52 6.76
Level Graduate 25.77 41.61 39.13 42.02
Post Graduate 57.18 47.22 52.17 45.41
Others 8.24 1.86 2.17 5.79
34  International Journal on Customer Relations Volume 4 Issue 2 September 2016

Quality Conscious High Expectation Apathetic Shoppers Impression Oriented

Shoppers Seekers (Segment 3) Shoppers
(Segment 1) (%) (Segment 2) (%) (%) (Segment 4) (%)
Monthly In- Less than 52.06 57.14 39.96 60.39
come 25000
25001-50000 35.54 26.09 47.83 29.47
50001-75000 7.22 8.07 6.52 7.73
75001-100000 0.52 5.59 4.35 1.45
More than 5.67 3.11 4.35 0.97
100000
Age Less than 25 50.52 40.37 28.26 57.97
years
25-35 years 32.47 45.96 50.00 31.40
35-45 years 13.92 6.83 19.57 8.21
More than 45 3.09 6.83 2.17 2.42
years
Occupation Service 55.67 53.41 71.73 51.69
Business 9.79 13.66 6.52 13.52
Housewife 2.06 3.72 0 2.89
Students 30.41 26.70 19.56 28.01
Others 2.06 2.48 2.17 386
Source: Primary data collected through questionnaire

Interpretation group of shoppers want good quality private label apparels.

Additionally they also consider private labels very close to
The review of the demographic profile (Table 3) of the their heart and are ready to continue purchasing it and gifting
segments reveals that segment 1 consists mainly of males, the same to their family and friends on different occasions.
unmarried people, mostly employed and possessing post- They do not consider private brands to be of cheap quality.
graduate degree. Segment 2 differs with relatively more of It is worth noting that majority of consumers in this segment
younger people with monthly income on the lower end and are post graduate professionals and have service as their
almost equally distributed in their educational qualifications occupation.
of graduates and post-graduates. Segment 3 mainly
Cluster 2: High Expectation Seekers
comprises post-graduate professionals in the age bracket of
25 – 35 years. Segment 4 has a large share of people younger It comprises 26.48% of shoppers. It has the highest mean
than 25 years, unmarried and earning less than Rs. 25,000 scores across all the factors among the three cluster groups
per month. except loyalty. It appears that mean scores for all the
factors (price, quality, risk aversion, corporate image and
Based on the demographic profiles and the analysis of their
service) except loyalty is 4. These people have reasonably
responses to the psychographic statements (factors), the
high income and want a lot from the store. These customer
segments were classified under the following nomenclatures.
personalities are the mature adult consumers. They will pay
Cluster 1: Quality Conscious Shoppers attention to every detail before making a purchase. They are
demanding shoppers who would reflect both utilitarian and
It comprises 31.9% of shoppers. It has high mean score hedonic benefits of shopping. It is very difficult to handle
for two factors. It appears that the shoppers have high and suffice the requirements of such type of consumers.
expectations from private labels in terms of quality and The best way to handle such customers is to give utmost
proximity. The mean score for both of them was 4, whereas respect; and go right to the point. This finding aligns with
the other four factors - price, risk aversion, serviceability, the literature and also shows that demanding shoppers are
and corporate image showed a moderate mean score of 3 and not loyal (William et al., 1978).
brand loyalty had the lowest mean score of 2. The shoppers
in this cluster want good quality private labels. The previous Cluster 3: Apathetic Shoppers
findings from research have always put more stress on price
It is the smallest cluster comprising 7.56% of shoppers. It
as one of the important parameters. On the contrary, this
has mean scores low for all the factors. Shopping for this
 Segmenting Private Label Shoppers: An Empirical Study  35

type of shopper is an onerous task and often shops ‘to get Table 4: Chi Square Test
it over with’. These consumers try to minimize shopping
time by getting into and out of store as quickly as possible.   Value df Asymp. Sig. (2-sided)
Majority of shoppers in this segment are older than 30 years,
Pearson Chi- 53.755 9 0.000
married and have high monthly income. Square
Cluster 4: Impression Oriented Shoppers Likelihood Ratio 54.262 9 0.000
Linear-by-Linear 0 1 0.995
The cluster comprises 34.04% of shoppers, representing the
Association
largest group of respondents. It has high mean score of 4 for
N of Valid Cases 608    
only one factor i.e. corporate image. For all other factors,
the mean score was low. This segment comprised mainly of Source: Primary data collected through questionnaire
shoppers below 25 years. They consider both the reputation
A rejected null hypothesis is reflected from the fact that the
of the store as well as the reputation of the brand which they
chi square test produced a chi square of 53.735 (p<.05). The
are buying.
test shows that there is an association between the types of
shoppers and store selected for purchase of private label
HYPOTHESIS TESTING apparels. However the strength of the association when
tested (Crammer’s V =.372, Contingency Coefficient = .585)
Hypothesis 1 gave moderate values which exhibits that the association is
H0: There is no association between the different types of moderately strong.
shoppers and the store selected for purchasing private labels. The graph shown in Fig. 1 also shows the type of shoppers
H0: There is association between the different types of in the stores namely Pantaloon, Westside, Globus, and Big
shoppers and the store selected for purchasing private labels. Bazaar
The Chi Square Test of independence which tests the
association
. between two categorical variables is chosen for
the analysis which is also shown in Table 4.

<Figure head> Fig. 1: Types of Shoppers in Different Stores

Fig. 1: Types of Shoppers in Different Stores
It can also be inferred that majority of quality conscious shoppers shop from Westside
It can also be inferred that majority of quality conscious
shoppers(46.1%),
shop fromfollowed by Globus
Westside (46.1%), (38%).
followed MajorityPantaloons
by Globus of high(36.4%). It also reveals
expectation seekersthatshop
impression
from oriented
shoppers prefer shopping from Big Bazaar (45.9%).
(38%). Pantaloons
Majority of (36.4%).
high expectation
It also seekers
reveals shop
that from
impression oriented shoppers prefer shopping from
Big Bazaar (45.9%).

Hypothesis 2
36  International Journal on Customer Relations Volume 4 Issue 2 September 2016

Hypothesis 2 A rejected null hypothesis is reflected from the fact that the
chi square test produced a chi square of 37.995 (p<.05). The
H0: There is no association between the different types of
test shows that there is an association between the types of
shoppers and the frequency of shopping.
shoppers and number of times they purchase private label
H1: There is association between the different types of apparels. However the strength of the association when
shoppers and frequency of shopping. tested (Crammer’s V =.144, Contingency Coefficient =
.243) gave low values which exhibits that the association is
The Chi Square Test of Independence which tests the
Linear-by-Linear Association 15.83 1.00 not very strong.
0.00
association between two categorical variables is chosen for
the analysis which is shown in Table 5. Additionally it can be inferred that maximum impression
N of Valid Cases 608 oriented shoppers shop once every month (44.7%) as they
Table 5: Chi Square Test are the ones who like to show off their outfits and would
like to be opinion leaders and spread word of mouth related
Source: Primary Data collected through questionnaire to the private label apparels. Majority of quality conscious
  Asymp. Sig. shoppers shop once in every six months (47.4%), as they lay
A rejected nullValue
hypothesis
Df is reflected
(2-sided)from the fact
stressthat the good
on very chi square test produced
quality rather a chi
than quantity.
Pearson Chi-Square 38.00 9.00 0.00
square of 37.995 (p<.05). The test shows that there is an association between the types of
Likelihood Ratio 37.62 9.00 0.00
shoppers As-
Linear-by-Linear and 15.83
number1.00
of times
0.00they purchase private label apparels. However the strength of
sociation
the association when tested (Crammer’s V =.144, Contingency Coefficient = .243) gave low
N of Valid Cases 608
values which exhibits  that the  association is not very strong.
Source: Primary Data collected through questionnaire

<Figure head> Fig. 2: Frequency of Shopping

Fig. 2: Frequency of Shopping
Additionally it can be inferred that maximum impression oriented shoppers shop once every
IMPLICATIONS TO THE RETAILERS consumers’ perceptions about private labels, which need
month (44.7%) as they are the ones who like to to show off their outfits and would like to be
be paid attention to by the retailers, namely, proximity,
In addition to the well-established factors like price and
quality,opinion leaders
some other and
factors spread
also word
play an of mouth
important private
related
role in to thebrand loyalty,
private labelrisk aversion, serviceability,
apparels.Majority of and
corporate image.
quality conscious shoppers shop once in every six months (47.4%), as they lay stress on very
good quality rather than quantity.

<A level>Implications to the Retailers

 Segmenting Private Label Shoppers: An Empirical Study  37

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