Perceived Risk of Private Labels as Opposed to Perceived Risk of Manufacturer Brands (the Case of Local and International Retailers in Saint-Petersburg)

Abstract

The main goal of the research was to investigate what factors influence the difference between perceived risk of private labels (PL) and manufacturer brands on the example of local and international retailers operating in Saint-Petersburg. It is necessary to specify that the research was conducted in Saint-Petersburg, among consumers of local and international FMCG retailers. In order to achieve the main goal, the following objectives were set :  to investigate how the concept of PL was developed in the recent years;  to find out which strategies can be applied by retailers to develop PL;  to analyze the role of consumer perception of PL in developing PL strategies;  to study the concept of perceived risk in relation to PL;  to develop a conceptual model of factors influencing the difference in perceived risk between PL and manufacturer brands;  to conduct an empirical study to test the model;  to develop practical recommendations for retailers concerning management of perceived risk when developing PL. The theoretical analysis was conducted, and the casual model including factors influencing difference in perceived risk both directly and indirectly was developed. The empirical study to test the model was explanatory, quantitative with a questionnaire used as a data collection method. The product category of butter was chosen, and 120 respondents were surveyed in four stores of two retailers: «Auchan» (international) and «Lenta» (local). The results of the research showed that the model is in a good enough accordance with data in order to be valuable for practical use and explanation of observed data structure. The analysis showed that there is negative and direct relationship between the independent variable (difference in perceived risk between PL and manufacturer brands) and (1) consumers’ familiarity with private labels, (2) retailer brand image, positive and direct relationship between independent variable and (3) consumers’ reliance on extrinsic attributes of the product; negative and indirect relationship between independent variable and (4) consumers’ experience with product category and (5) consumers’ specific self-confidence. Based on these findings the following practical recommendations for retailers operating in Saint-Petersburg were developed of how to manage the perceived risk of private labels when developing private labels: to educate consumers about PL, to increase the consumers’ specific self-confidence, to improve the visual identity of PL, to improve quality control management and recommendations of how to choose the private label branding strategy. The detailed recommendations of how to do it are developed in master thesis with regard of cost constraint of PL development.