The influence of store attributes on consumer attitudes towards private labels the case of metro cash and carry vietnam

MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS HOCHIMINH CITY










Nguyn Nh Chang


The influence of store attributes on
CONSUMER ATTITUDES TOWARDS PRIVATE LABELS
– The case of Metro Cash and Carry Vietnam


MASTER’S DISSERTATION

In
Business Administration

Ology code: 60.34.05



Supervisor
Asso. Prof. Dr. Nguyn ình Th

Ho Chi Minh City, 2010
THE INFLUENCE OF STORE ATTRIBUTES ON
CONSUMER ATTITUDES TOWARDS PRIVATE LABELS –
THE CASE OF METRO CASH & CARRY VIETNAM.

ACKNOWLEDGEMENTS 1
ABSTRACT 1
ABBREVIATION 1
Chapter 1: INTRODUCTION 1
1.1. Background to the research 1
1.2. Retail modernization in Vietnam 2
1.3. The Metro Cash and Carry Vietnam 3
1.4. Research objectives 5
1.5. Significance of the study 6
1.6. Research question 6
1.7. Structure of the thesis 8
1.8. Definitions 9
1.9. Scope of the study 10
1.10. Summary 11
Chapter 2: LITERATURE REVIEW AND HYPOTHESES 12
2.1. Introduction 12
2.2. Retailer motivations for private labels 13
2.3. The evolution and repositioning of private labels 14
2.4. The store attributes 14
2.5. The relationship between store attributes and consumer attitudes towards private
labels 15

2.6. The effects of store attributes on consumer attitudes towards private labels 17
2.7. Summary 20
2.8. The research gap 21
Chapter 3: METHODOLOGY 22
3.1. Introduction 22
3.2. Research Methodology 22
3.2.1. The development of the scales 23
3.2.2. The questionnaire design 24
3.2.3. Measurement 25
3.2.4. Data Collection 25
3.2.5. Sample Size and Type 26
3.3. Summary 27
Chapter 4: DATA ANALYSIS 29
4.1. Introduction 29
4.2. Preliminarily qualitative examination of the data through focus group (pilot study)29
4.3. Respondent profile 30
4.4. Quantitative examination of the data through questionnaire 32
4.5. Summary 37
CHAPTER 5: CONCLUSIONS AND IMPLICATIONS 39
5.1. Introduction 39
5.2. Significance of findings 39
5.3. Implications for theory 41
5.4. Managerial implications 42
5.5. Limitations of the research 43
5.6. Further research 45
5.7. Dissertation conclusions 46
REFERENCE 48
TING VIT 48
ENGLISH 48
APPENDIX A: LIST OF TABLES 52

APPENDIX B: MCCVN’S PRIVATE LABELS PORFOLIO 60
APPENDIX C-1: THE SURVEY QUESTIONNAIRE– TING VIT 61
APPENDIX C-2: THE SURVEY QUESTIONNAIRE – ENGLISH 66
APPENDIX D: THE INTERVIEW TOOLKITS 71


List of Tables
Table 1: MCCVN performance 4
Table 2: The item list of store attributes 23
Table 3: Demographic profile of all respondents 31
Table 4.1: Descriptive statistics – Store attributes 52
Table 4.2: Descriptive statistics – Consumer attitudes 53
Table 5.1: Reliability – Store attributes 53
Table 5.2: Reliability – Consumer attitudes 54
Table 6.1: EFA results – KMO result 54
Table 6.2: EFA results – Communalities result 55
Table 6.3: EFA results – Total variance explained 56
Table 6.4: EFA results – Rotated component matrix 57
Table 7.1: Regression analysis – R
2
value 58
Table 7.2: Regression analysis – Coefficients results 59
Table 8: Hypothesis test results 36
ACKNOWLEDGEMENTS
Here are numbers of persons who have played important roles in assisting me finishing
this research. I would like to thank Asso. Prof. Dr. Nguyen Dinh Tho who is my
sponsor of the dissertation. Thanks to his invaluable academic guidance while leading
me to this approach and encouraging me in uncovering the issues in comply with a
great understanding towards my working and studying time table, I deeply dug out the
matter that is understood as also useful to the company I worked for.

I also would like to thank Dr. Tran Ha Minh Quan who was my class head teacher and
gave me lots of encouragement and proactive support over the course.
By the way, I couldn’t help acknowledging my classmates and colleagues who gave up
their time to look for related documents and to help coaxing data in case.
So does a thorough understanding of my family, especially my beloved husband during
the progress, become a significant motivation for me to successfully fulfill this master
project. I therefore would be grateful to their support and patience indeed.
Last, I would thank all consumers who have joined the questionnaire with sincere and
active feedback to help me put the theory of consumer attitudes towards private labels
in practice, specifically applied on the real case of Metro Cash and Carry Vietnam.

i
ABSTRACT
The retail market is now growing faster and bigger than ever over the world of which
Vietnam is the sixth most attractive retail market in the developing world in 2009.
Considered as one of key motivation strategies to differentiate retailers from retailers,
private label products have been introduced and quickly become a global phenomenon
and of increasing interest to practitioners and academics alike (Hoch and Banerji, 1993;
Quelch and Harding, 1996). Private labels have achieved a significant global sales
share, especially in grocery market, with a bright future of further development
foreseen.
Still there is little research on private labels in Vietnam. This dissertation therefore
would contribute an empirical study about the influence of store attributes on the
consumer attitudes towards private labels, explored specifically to Metro Cash and
Carry Vietnam. There are two parts to deeply be deployed in the dissertation: 1) store
attributes, their roles and measurement scales; 2) consumer attitudes towards private
labels in reference with the influence of store attributes. And the Metro Cash and Carry
Vietnam case is chosen to examine.
Deploying private labels from 2002, MCCVN enjoyed great success last year with
sizeable sales share increased nearly double from 1.8% in 2008 to 3% in 2009 and its

target to 2016 is 20% (MCCVN source, 2009). With the effort to find out determinants
of the success of private labels, consumer attitudes have been dug into while the
concept of retailer risen as brand. The study bases on Chowdhury et al. (1998) and
Dodd and Lindley (2003) empirical studies of the influence of store attributes on the
perceptions of specific private labels with reference to problem approach of Fraser
(2009) dissertation, and deep analysis on brand equity of Nguyen & Nguyen (2008).
ii
From an academic viewpoint, this study contributes by illustrating that store attributes
are considered as major strategic tools in the highly competitive retailing environment.
This finding points to the need for both practitioners and researchers to examine the
“fit” between store positioning and private label positioning. For retailers, the finding
suggests the need to reduce perceived risks of private labels. For manufacturers, the
finding indicates that they should highlight the differences between their national
brands and private labels, especially in terms of the superior quality. For researchers,
the finding also suggests that store attributes should be incorporated in models
predicting consumer proneness towards private labels.
iii
ABBREVIATION
GRDI: The Global Retail Development Index
Horeca: Hotels, Restaurants and Caterings
MCCI: Metro Cash and Carry International
MCCVN: Metro Cash and Carry Vietnam
MGD: Modern Grocery Distribution
SCO: Services, Companies and Offices
iv
Chapter 1: INTRODUCTION
1.1. Background to the research
Private label products, or store brands, have become a major force with more than 268
billions US dollars in sales presented (Perez, 2008). Despite their market penetration
varies from countries to countries, from retailers to retailers and from product

categories to product categories; these brands, owned and managed by retailers, have
grown to be a noteworthy threat to national brand manufacturers because of the too-
closed quality gap between them. To retailers, private labels are not only one of key
motivations for differentiation but also a strategy to improve their profitability, store
attributes and brand loyalty (Quelch and Harding, 1996).
This dissertation discovers consumer attitudes towards private labels of MCCVN with
respect to key attributes of the store. Even though consumer attitudes towards private
labels have been span more than 40years in the world, this concept is still new in such
a developing market of Vietnam as the first stage of penetration and further
development prospect predicted in the future.
The literature review would deeply draw the whole scene of private labels from the
viewpoint of retailers. It also presents private label positioning as well as determinants
of consumer attitudes towards private labels in which store attributes impressed and
analyzed in detail base on the research of Chowdhury et al. (1998) and Dodd and
Lindley (2003) with reference to the dissertation of Fraser (2009) and Beyza and Leyla
(2007), and the examination on brand equity of Nguyen & Nguyen (2008).
Within the scope of the first chapter, the retail market of Vietnam in general and Metro
Cash and Carry Vietnam in particular is examined. The research question and
hypotheses together with the methodology used in the study are introduced in the
1
subsequent sections, following by definitions and explanations of some terminologies.
The last part provides a summary of the chapter.
1.2. Retail modernization in Vietnam
In Vietnam, the modern retailing began in the mid 1990s in the HCMC area (James M.
Hagen, 2002), followed by the capital, Hanoi, and Danang. By end of 2007, there are
153 supermarkets (Lotte Mart, Coop Mart, Maximark, Citimart,…), 70 convenient
stores (G7 mart, Shop and Go, Vinatex…), 4 hypermarkets (Big C) and 5 warehouse
clubs (MCCVN) (Retail and shopper trends – Urban HCMC and Hanoi, AC Nielsen,
2008). Private labels have been established in 2000s, mostly by namely substantial
stores as MCCVN, Coop Mart, Big C and Maximark. Although they are considered as

one of key parts of the modern retail strategy, their contribution is humble to count for,
even in their internal sales shares, for example in MCCVN (one of the biggest
concentrating on private labels from the beginning) private label sales share is only by
3% in 2009.
As ranked by global management consulting firm A.T. Kearney (the Global Retail
Development Index – GRDI), Vietnam has fell down to 6
th
in 2009 from the most
attractive retail market in the developing world in 2008 because of inflationary
pressures from its own real estate boom, consumer price inflation in the last half of
2008, and a significant drop in its export-driven economy. However, this retailing is
still considered one of the most attractive industries in Vietnam and continuing to
transform Vietnam economics with domestic consumption as a primary focus
coinciding with its committable opening doors to international investors, young
population and continuously urbanizing process – a trend that should favor continued
growth in retail over the long term (Moriarty and Shabat, A.T. Kearney partners). This
retail process of modernization and innovation would trigger enhance the bright
prospect of the private label development.
2
1.3. The Metro Cash and Carry Vietnam
MCCVN has started business in Vietnam since 2002. By 2009, it is voted as the first
choice international wholesaler and the market leader in Vietnam with 9 stores nation-
wide currently and 5 more plots expansion processing. With sales regularly increase
year after year, in 2009, it achieved vnd bil7,188 (11% increase in compare with 2008)
vs. vnd bil15,770 of the modern grocery distribution in hypermarket and supermarket
(MGD; 37% increase in compare with 2008); or 45.6% of MGD Vietnam (Source:
Euromonitor, MCCI Corp. Controlling). However, competitors still exist as
hypermarkets, supermarkets and convenient stores (Big C, Saigon Co-op, Maximark,
Lotte…), wet markets, importers, black/grey markets and shortly coming international
retailers like Tesco, Auchan, Aeon. Its most limitations but opportunities to improve

are payment method by cash and limited delivery services.
It is also necessary to have a quick glance on MCCVN’s customer types. MCCVN is a
solely special business type in Vietnam that mostly concentrates on sales in bulk. Their
customer types are professionals, classified into three: Horeca to concentrate on
hotel/accommodation, restaurant, bar/café, canteen, eateries and catering customers;
Traders to concentrate on big groceries, mom and pop shops and small wholesalers;
SCO to concentrate on service, companies, offices and non-residents consumers. While
customer shares among these types are in turn 12.6%, 19% and 68.4%; the turnover
shares are slightly alike 15%, 30% and 55% (MCCVN source, 2008). For the scope of
this dissertation, SCO consumers are chosen to examine because of its largest ratio in
both consumers share and sales share. In another reason, SCO is also the consumer
type of other supermarkets, hypermarkets and convenient stores. That not only helps
expand the dissertation scope to apply to other store types (supermarket, hypermarket,
convenient store…) in somehow but also be adaptable for retailing concept applied for
MCCVN in retailing aspect.
3
4
Table 1: MCCVN performance

There are a number of MCCVN's private labels: Aro/ Fine Food/ H-Line/ Luxana/
Horeca Select/ Sigma/ Fairline/ Authentic/ L.Lambertazzi/ Rioba/ Watson and/or
Tarrington House. These products are exclusive product lines of Metro, called Metro
own brands (private labels – see Appendix B). They are targeted by different levels,
such as Aro is considered as price entry (C-level) of food and partly non-food products
while Fine Food is positioned as umbrella brand (B-level brand of price and A-level
brand of quality) of food products only
1
. They are therefore set to compete to
corresponding levels of national brands.

1
The brand level is ordered from A (premium level) to B (value for money) to C (price
entry)

Member of METRO GroupMETRO Cash & Carry International GmbH
Source: MCCVN
Metro vs. competitions among professional customers
METRO performance
METRO performance
MCCVN performance
SCO
55%
Trader
30%
Horeca
15%
Sales share per branch 2008
MCC sales growth, % , p.y.
2007 2008 2009
Horeca
Food
Non food
Trader
Total
SCO
11.0
30.4
38.0
-9.9

4.1
26.3
6.6
23.9
35.0
10.8
33.2
39.0
15.8
38.0
42.0
-0.4
14.1
30.7
2
28
71
100
13
32
57
51
9
52
82
96
6
4
16
5

30
6
1
17
0
20
40
60
80
100
120
Top 1 supplier Top 2 supplier One of many
suppliers
(prompted)
Prompted
awareness
Customers (HoReCa, Trader, SCO), %
METRO
Big C
Saigon Coop
Maximart
Binh Tay Market
Source: IMAS study 2008
1.4. Research objectives
As previously mentioned, private labels are new phenomenon in Vietnam. To retailers,
it plays an important role and becomes 6
th
out of retailers’ top ten critical issues
(Fraser, 2009; MCCVN – Ownbrand training, 2009). Not only a key motivation to
create competitive advantages through store differentiation which helps retailers to

enhance store patronage and store loyalty, to create brand loyalty as well as to attract
more consumers from other retailers through high-quality private labels; it is also
considered as a means to improve profitability, through both higher retail margins and
increased bargaining power with national brand manufacturers (Fraser, 2009).
Vietnam is a developing market. The role of brand image is more and more important.
However, there is little research examined brand image in Vietnam, or they are not
perfectly fit in well with Vietnam case (Nguyen & Nguyen, 2008). The dissertation
examines consumer attitudes towards private labels with reference to store attributes,
only more recently has there been research of their roles on attitudes towards private
labels, tested in other countries outside Vietnam. With the purpose to contribute an
empirical study on this issue, the overall objective of this dissertation is to explore the
impact of store attributes on consumer attitudes towards private labels. Specifically, it
examines the impacts of:
a. Product variety on consumer attitudes towards private labels
b. Product quality on consumer attitudes towards private labels
c. Price on consumer attitudes towards private labels
d. Service on consumer attitudes towards private labels
e. Atmosphere on consumer attitudes towards private labels
5
f. Convenience on consumer attitudes towards private labels
1.5. Significance of the study
The study would help supermarkets, hypermarkets, convenience store chains,
marketing companies, market research companies, marketing researchers and students
to have clearer view on what private labels are and how they are important as well as
the influence of store attributes:
− To supermarkets, hypermarkets and convenience store chains: to draw their
strategies on improving their competence and revenue as much effective as possible
in reference to the role of private labels
− To marketing companies and market research companies: to catch the important
attributes of the store on consumer attitudes towards private labels as well as ways

to measure them. From that point, they would deploy efficient market research
projects as well as give solutions to improve private label images and/or store
image to their clients.
− To marketing researchers and students: this study would somehow draw an
empirical study on the role of store attributes on consumer attitudes towards private
labels. It is a useful reference for researchers and/or students who would have
deeper studies on this subject in Vietnam.
1.6. Research question
The research problem is addressed in the following question:
How do store attributes influence consumer attitudes towards private labels in terms of
Metro Cash and Carry Vietnam?
6
Private labels chosen to examine here are Metro private labels, based on the well-
known brands by consumers; including Aro, Fine Food, H-Line, Luxana, Horeca
Select, Sigma, Fairline, Authentic, L.Lambertazzi, Rioba, Watson and Tarrington
House.
According to Chowdhury et. al (1998), there are six attributes of the store: product
variety, product quality, price, service, atmosphere and convenience. The research uses
these attributes to test their influence on consumer attitudes towards private labels and
they are called independent variables. There are twenty-four items in which variety (3
items), quality (5 items), price (3 items), service (5 items), atmosphere (5 items) and
convenience (3 items). And the dependent variable “consumer attitude” consists 6
items.
There are six hypotheses developed to test the role of store attributes on consumer
attitudes towards private labels:
(H1): Product variety positively influences consumer attitudes towards private labels
(H2): Product quality positively influences consumer attitudes towards private labels
(H3): Price positively influences consumer attitudes towards private labels
(H4): Service positively influences consumer attitudes towards private labels
(H5): Store atmosphere positively influences consumer attitudes towards private labels

(H6): Convenience positively influences consumer attitudes towards private labels
The questionnaire is built base on these hypotheses (see Appendix C). And the five-
point Likert scales with the anchors from strongly disagree (1) to strongly agree (5) are
7
used to measure the items in the study. This approach would simplify data entry and
interpretation, as higher scores mean higher ratings.
1.7. Structure of the thesis
This dissertation is organized in five chapters. The introduction chapter outlines the
research objectives and empirical significance of the study in line with a brief of
research problem and hypotheses. Some terminologies’ definitions and explanations
are also provided in the next section, followed by the summary in the last part of the
chapter.
Chapter two presents the literature review, starts with an overview of retailer
motivations for which private labels are introduced. Also does retailer positioning of
these brands provide in a brief, followed by an another deep discussion of the
relationship between store attributes and private labels as well as the effects of store
attributes on consumer attitudes towards private labels.
Chapter three develops the methodology that is used to collect and analyze the data for
the research. In line with the quantitative methodology to be followed, six hypotheses
are developed in the association between store attributes and private labels. Research
methods used to collect and measure the data include the development of the scales,
questionnaire design and data collection. The data is also to be collected using an
intercept survey and a self-administered questionnaire.
Chapter four summarizes the result of data analysis, including the qualitative
examination through focus group, respondent profiles and the quantitative examination
through questionnaire of which presented descriptive statistics results, the assessment
of reliability, validity and the results of the hypothesis tests. The examination indicates
that most of store variables which hypothesized to affect consumer attitudes towards
private labels are significantly correlated with attitude dependent variable. Six
8

hypotheses are tested using multiple regression analysis. According to the result,
consumer attitudes are strongly affected by perceptions of store attributes in reference
of product quality, price, service, atmosphere and convenience, except product variety.
Chapter five presents significance of findings, the implications for researchers and
managers and limitations of the study as well as opens new trends of further research.
The research concludes that store attributes play an important role in consumer
attitudes towards private labels, and that private label positioning should be uniquely
related to the unique positioning of the store. Concurrently, investment in the store
atmosphere could have a positive impact on consumers’ perceptions about private label
quality. Above all, the retailers are suggested to implement other marketing decisions
than store attributes to attract new buyers of private labels and to increase their
negotiation powers to manufacturers. Albeit the scale and scope limited with only two
stores in HCMC of Metro Cash and Carry Vietnam examined, the study opens further
areas for the additional research in the future.
1.8. Definitions
Since the private label is a new concept in Vietnam, it’s necessary to have an
explanation of what that term is and how it is used in this study. Private labels are
defined as consumer products that are designed, produced, controlled by, and which
carry the name of the store or a name owned by the store; also known as store brands
or dealer brands. (Supply Chain Insight, 2007). An example would be MCCVN’s
“Aro” products. Sometimes we see another terms used for private labels such as own
brands, own labels (Fraser, 2009), house brands, distributor brands According to
MCCVN, private labels are called own brands. And they are defined as private labels
handled by modern retailers whose goods and/or services are produced by themselves
and/or a multiple third parties. It can be named by the retailer’s name, or a separate
name, or a combination of both. For instance, Sam’s Choice is one of Wal-Mart’s
9
private labels while Woolworth includes both Signature Range and Woolworths Select
brands.
Moreover, the term “retail brand” or “retailer brand” may either refer to the overall

brand or name of the retailer. Also, generics are one kind of private labels that refer to
no-name, unbranded or brand-free products. They are usually packaged in white or
single color surroundings with minimum required product information listed on the
package with price set well under the brands’. In fact, there is unofficially agreed
terminology for private labels and other terms to be used in the literature, although they
all refer to the same phenomenon (Fraser, 2009). For the purposes of this study, the
term private labels is used to comprise all different private label types and various
terms used for them.
The national brand is another considered terminology. That is the brand name of a
product distributed nationally under a brand name owned by the producer or
distributor, as opposed to local brands (products distributed only in some areas of the
country), and private label brands (products that carry the brand of the retailer rather
than the producer (
en.wikipedia.org/wiki/National_brand
) such as Head and Shoulders,
Omo, P/S, Coca-Cola, X-men, Minh Long ceramics… These products are also sold in
supermarkets but their brands don’t belong to stores.
1.9. Scope of the study
Since Vietnam is in the first stage of private label establishment and development, the
findings would differ from other countries with which the variety of private label
development level as well as the difference of retail concentration and consumer
attitudes. The important point should be underlined is MCCVN’s customer types. Only
one kind of its customer types (SCO) is examined. The stores chosen in the research
are MCCVN’s stores (An Phu and Hiep Phu in HCMC) to examine consumer attitudes
10
towards its private labels. As a result, the findings may not be typically general results
to all MCCVN's stores nationwide, to other stores outside MCCVN system in Vietnam
(for example Big C, Coopmart, Maximark…) and to all private labels.
1.10. Summary
The chapter is divided intro 10 sections to introduce the basis of the dissertation.

Starting with a brief background, the research question and hypotheses are set out. The
next section outlines the theory bodies which would be reviewed deeply in the chapter
two, together with the methodology, which would be treated as a large part to be
discussed separately in the chapter three. Then the outline of the whole dissertation is
clearly drawn to easier follow up its flow of deployment. The private label and national
brand definitions are provided as useful contributions. The last part identifies the
delimitations of the study. Base on the address of the research question “How do store
attributes influence consumer attitudes towards private labels in terms of MCCVN?”,
the study begins in detail with the chapter two of relevant literature review.
11
Chapter 2: LITERATURE REVIEW AND HYPOTHESES
2.1. Introduction
Recognizing the more and more importance of private labels to both retailers and
national brand manufacturers, as well as the variation of their market penetration from
countries to countries, retailers to retailers, categories to categories… as mentioned in
the chapter one, there are numbers of private label literature streams to examine the
consumers, retailers and market factors for their success. According to Grewal et al.
(1998), positive store attributes are considered as some of key factors for retailers to
achieve and sustain their success in an increasingly competitive marketplace. Retailers
who manage their image effectively can influence consumers’ store patronage
decisions and improve their competitiveness. Similarly, private labels - that are unique
to the store - may increase consumer traffic, generate greater store loyalty and
contribute to profitability (Dick et. al. 1996).
In the marketing literature store attributes are identified and studied by many
researchers. In line with those studies, this chapter would base of the previous
empirical studies of Dodd and Lindley (2003); Beyza and Leyla (2007) and Fraser
(2009) to dig into the influence of a set of store attributes on consumers’ perceptions of
private labels.
The first part of this literature review presents private labels’ motivations and benefits
to retailers. Those explain why retailers try to introduce private labels in the role of not

merchants but marketers. Following is the evolution and repositioning of private labels.
Subsequently, the next two parts outline store attributes in line with the effect of store
attributes on consumer attitudes towards private labels. Main outcomes from these
literature reviews is also summarized before the research question once again indicated
in the final section to thoroughly develop in the following chapters.
12
2.2. Retailer motivations for private labels
Retailers always try to increase as much gross margin as possible in doing business.
However, the competition among retailers on the same national brands depresses
retailers’ margin emergence. They thus have to find out another way to easier control
their margin. Base on industry sources, to Hoch and Banerji (1993), gross margin to
retailers on private labels is from 20 to 30 percent higher than on national brands (To
MCCVN, private labels’ gross margin is set 10-20% higher averagely). On the other
hand, the market share taken by private labels also creates actual or potential threats to
national brand manufacturers, enhances retailers’ bargaining power as well as lessens
wholesales prices of national brand products (MCCVN – Ownbrand training_v2.ppt).
This finding has largely been confirmed in private label literature. The manufacturers
in this case may response depending on consumer loyalty to national brands
(Gabrielsen and Sorgard, 2007).
While gross margin is one of the earliest reasons for retailers to introduce private
labels, another key motivation is to create competitive advantage through store
differentiation. By offering products unique to the stores, the retailers expect to
enhance store patronage and store loyalty (eg. Quelch and Harding, 1996). However,
there are mixed evidences on whether store loyalty is created by private labels in
practice. Some confirm that private labels do create store loyalty. According to
Richards et al. (2007), private labels play an important role in attracting consumers
from other retailers. Similarly, Anselmsson and Johansson (2007) report that the more
private labels bought, the more loyal consumers are to the store. Sudhir and Talukdar
(2004) study that store patronage is enhanced through store differentiation by private
labels while Corstjens and Lal (2000) find that high-quality private labels create store

loyalty and differentiation through consumer “inertia” (Fraser, 2009).
13
Private labels are also proved to compete with leading national brands by creating
brand loyalty. It means that market share is taken by private labels from national
brands. Private label brand loyalty, nevertheless, is determined at least in part by store
loyalty.
2.3. The evolution and repositioning of private labels
Laaksonen and Reynolds (1994) develop a typology showing how retailers have
repositioned their retail brands over time. According to this typology, private labels
tend to evolve through four stages or “generations”. The first generation is lower
quality and low price – “generics”, while the next generation comprises private labels
of slightly higher quality but still lower quality than national brands, where price is still
important. The next stage of development is third generation – “me too” private labels
of comparable quality to national brands but which have slightly lower prices than
national brands and are perceived as value for money. The more advanced fourth
generation private labels offer innovative, unique products of the same or better quality
than national brands and prices that are equal to or higher than national brand leaders.
While this typology is developed largely in relation to developments in the United
Kingdom and Europe, retailers in North America have also started to introduce private
labels of equal or even better quality than national brands although still at lower prices
(Quelch and Harding, 1996).
2.4. The store attributes
Knowing which attributes of the store contribute positively to consumer attitudes
towards private labels can provide retailers strategic advantages. By investing in those
specific attributes, they can gain the advantage of store on the one hand and on the
other hand transfer these positive attributes to consumer attitudes towards their private
labels, by which private labels are generally perceived as low quality compared to the
14
national brands (Dick et. al. 1996). A private label can be successful in one category
whereas not in other category. This may be because of the variances in promotional

activities, design of package, and the perceived quality of private labels in different
product categories.
Store attributes are regarded as critical subjects to the retail success because of their
influences. They are believed to have positive impacts on store patronage behavior and
hence profitability (Hansen and Solgaard, 2004). In order to maintain and enhance
retailers’ positions under today’s tough competition environment, retailers can use
store attributes as strategic tools, which have a positive effect on profitability and store
performance. Additionally, store attributes can increase the consumers’ likelihood to
shop in the store again, length of stay in the store and quantity of purchase (Fraser,
2009).
Within the scope of this study, store attributes are adapted from the related literature
(Chowdhury et. al., 1998; Dodd and Lindley, 2003). Store attributes thus commonly
mentioned by those studies are product variety, product quality, price, store
atmosphere, employee service and location/convenience.
2.5. The relationship between store attributes and consumer attitudes
towards private labels
Consumer inferences about the quality of merchandise (brands) and service are
antecedents of the store. Meanwhile, they discover some factors that have effects on
private labels. As confirmed, favorable store atmosphere in relating to store design not
only increases favorable perceptions of merchandise quality but also leads consumers
to believe that merchandise price is higher. Furthermore, the store assortment (variety)
is also another factor that offers consumers the convenience of one-stop shopping to
purchase products with wide cross-categories (Ailawadi and Keller, 2004). As
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confirmed by Sayman and Raju (2004), the bigger the number of private labels present
in the store, the more favorable the consumers regard the private labels in a given
category.
On the other hand, the store reputation is a cue to product quality. Following the
findings of Grewal et al. (1998), store name positively affects on the store and store
attributes till their turns affect on purchase intentions for a product. However,

consumers’ purchase decisions are not only rely on the store name but also the brand
name and price because of wide competing products sold over a broad quality range
while the retailer reputation is not specific to a product quality.
Consumer perceived quality of private labels is often examined in the literature within
the context of perceived risks. There is an extended model of risk which is also
relevant to private labels. In this model, consumers assess their overall perceived risks
based on prior knowledge, involvement, purchase goals and usage, uncertainty and
consequences relating to relevant product attributes. The product attributes in turn are
linked to functional, monetary, social, and psychological risks. These risks can be
defined in terms of potential losses: the functional risk relates to the potential loss
resulting from inadequate product quality, the financial or monetary risk relates to the
potential financial loss resulting from a bad purchase, while the social risk relates to the
potential loss of image or prestige resulting from the purchase or use of a product,
especially if used in public.
There are reciprocal influences between store attributes and private labels. Citing from
Semejin et al. (2004), consumer perceptions of private labels are influenced by their
judgment of store attributes. And store attributes can play a role of “risk reducer” by
reducing functional and psychosocial risks associated with buying private labels in
certain categories or according to Liu and Wang (2008), store attributes are strong
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predictors of general attitudes towards private labels in Taiwan. In a Spanish study,
Guerrero et al. (2000) confirm that the perception of private label quality depends on
the store, or again confirm the role of store attributes on consumer attitudes towards
private labels. Another recent study by Zielke and Dobbelstein‘s (2007) on specific
brands have given an important highlight that “the attitude towards specific private
labels is more important than general attitudes towards private labels in terms of
willingness to buy new private label products” (Fraser, 2009). Prior to the study of
Dodd and Lindley (2003), they posit that consumer perceptions of specific private
labels and store attributes are positively associated, even though perceptions of specific
private labels differ from stores.

Simultaneously, private labels can also have an important role in positioning the
retailer in consumers’ minds. Private Label Manufacturer’s Association in 1999 proved
that image is considered as one of the most important reasons for introducing private
labels. Earlier, Dhar and Hoch (1997) find that it is a positive factor to use store name
on private label products in explaining variances in private label penetration across
retailers. Later studies also confirm that private labels are important in enhancing retail
store differentiation.
2.6. The effects of store attributes on consumer attitudes towards private
labels
As mentioned above, store attributes lead consumers to form an overall evaluation that
not only affect their attitudes towards the store as a whole but also their attitudes
towards private labels. The more positive thinking of consumers to the store, the more
positive evaluations they appraise its private labels (Semeijn et al., 2004). Dodd and
Lindley (2003) also found the effect of products’ quality that the store offers to its
consumers on the attitudes towards the private labels. It has been shown that
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merchandise (variety and quality) influences positively consumer attitudes towards the
private labels (Semeijn et al., 2004). So, we hypothesize that:
H1. Product variety positively influences consumer attitudes towards private labels.
H2. Product quality positively influences consumer attitudes towards private labels.
With respect to the price attribute of the store, Dodd and Lindley (2003) report that low
prices in the supermarkets do not have any impact on consumer attitudes to private
labels. It may be because of the product specific nature of price’s effects on quality
perceptions (Wheatley and Chiu, 1977). Product’s price solely is an indicator of
perceived quality (Dick et al. 1994) whereas price level in the store is not. However, in
the early stage of Vietnam, consumers perceive the quality of private labels lower than
national brands and that perception is likely to stem from consumer’s proneness to
associate quality with price. That’s why we keep hypothesizing an effect of price
attribute of the store on private labels:
H3. Price positively influences consumer attitudes towards private labels.

Semeijn et al. (2004) show that service (knowledgeable, courteous and helpful
employees, no problems when returning items, convenient opening hours…) could
influence consumer attitudes to private labels. Consumers may believe that a store
offering services of good quality (essentially, by the intermediary of its salespeople) is
likely to stock and recommend products of quality:
H4. Service positively influences consumer attitudes towards private labels.
According to the environmental psychology, environmental factors such as interior
design, store layout, lighting, color, music, overall cleanliness of the store, etc.
influence the consumer responses (Dick et al., 1996). The shopper may believe that the
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