Estimating store brand shelf space: a new framework using neural networks and partial least squares

Mónica Gómez and Shintaro Okazaki
Universidad Autonóma de Madrid

INTRODUCTION

The role of the store brand is increasingly important in retail decision making. Also termed 'retail brand' or 'private-label product', more and more firms offer the store brand as an alternative to a market-leading brand, offering consumers equal quality at a lower price. Store brand items are no longer considered as 'white label', and retailers are willing to sell them not only for their high profitability but also for their clear brand identity. Retailers attempt to provide rigorous quality controls for store brands without increasing the final price. Prior research suggests that at least three factors contribute to a successful store brand strategy: the reduction of the gap or distance between the store brand and the national brand (Dunne & Narasimhan 1999); its favourable price (Laaksonen & Reynolds 1994); and a reduced number of brand options per shelf (Simmons & Meredith 1983; Fernández & Gómez 2005).