Bonnet, Céline, Bouamra-Mechemache, Zohra and Klein, Gordon (2022) National brands in hard discounters: market expansion and bargaining power effects. European Review of Agricultural Economics, vol. 49 (n° 5). pp. 1113-1145.

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Identification Number : 10.1093/erae/jbac004


In this paper, we analyse the strategic role of the recent introduction of national brand (NB) products by hard discounters (HDs) in the French food retailing market and its impact both at the retail and manufacturer levels. We use a structural econometric model of vertical relationships and consider the competition between mainstream retailers (MSRs) and HDs, and between NBs and private labels (PLs). We apply this model to the French dairy dessert market, which is characterised by a high penetration of PLs and a high concentration at the manufacturer and retail levels. Using a counterfactual analysis, we show that the introduction of NBs by HDs clearly increases hard discounters’ profits. Consumers benefit from this strategy. Moreover, we find an increase in the profit of manufacturers of NBs but at the expense of MSRs. We also show that the introduction of NBs by HDs does not only act as a means to attract different consumer groups and extend their market share through a variety effect. It also serves to improve their bargaining position with respect to their PL providers.

Item Type: Article
Language: English
Date: December 2022
Refereed: Yes
Place of Publication: Oxford
JEL Classification: L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
L25 - Firm Performance - Size, Diversification and Scope
L81 - Retail and Wholesale Trade; Warehousing; e-Commerce
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 21 Mar 2023 08:12
Last Modified: 02 Oct 2023 09:15
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