Shelf space assigned to store and national brands: A neural networks analysis

Abstract

Purpose

To empirically analyse the relationship between the shelf space assigned to brands and several factors related to store management.

Design/methodology/approach

The data come from a study of 40 product categories in a sample of superstores in Spain. The variables are: shelf space occupied by private labels, private labels market share, number of promotions, assortment (number of brands and number of varieties) and prices gap between private labels and national brands. A neural network analysis is then applied to the data. Methodologically, this method is shown to have better predictive power than a multiple regression.

Findings

There is a direct relationship between the space occupied by store brands and the market share, and an indirect relationship between the space and the price differential gap, the number of national brands and the range of choice.

Research limitations/implications

The main limitation of this research is the time spent on collecting the data. Another limitation is that some variables have not been included in the study such as inventory. The conclusion can be used to account for behaviour of retailers in their outlets and could be used by manufacturers to determine which factors have an influence on the location of their brands on the shelves.

Practical implications

It has practical implications for retailers because their “over‐merchandizing” of own brands can damage the overall profitability of the category. On the other hand, national leading brands will have to invest more resources in advertising to sustain customer loyalty.

Originality/value

This article shows the impact that store brand shelf space has on different variables related to profitability, market share, and assortment. It has value for three agents: academic researchers, manufacturers and retailers.

Citation

Gómez Suárez, M. (2005), "Shelf space assigned to store and national brands: A neural networks analysis", International Journal of Retail & Distribution Management, Vol. 33 No. 11, pp. 858-878. https://doi.org/10.1108/09590550510629437