Do Store Brands Aid Store Loyalty?

Do store brands aid store loyalty by enhancing store differentiation or merely draw price sensitive customers with little or no store loyalty? This paper seeks to answer the question by empirically investigating the relationship between store brand loyalty and store loyalty. First, we find a robust monotonic positive relationship between store brand loyalty and store loyalty using multiple loyalty metrics, data from multiple retailers, and controlling for alternative factors that can influence store loyalty. Second, we take advantage of a natural experiment involving a store closure and find that the attrition in chain loyalty is lower for households with greater store brand loyalty prior to store closure. Together, our results are consistent with evidence for the store differentiation role of store brands.