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Effects of store brand perceived risk on buyers’ behavior – four decades of research overview

Annales Universitatis Mariae Curie-Skłodowska, sectio H – Oeconomia, 2015

Przemysław Łukasik, Bruno Schivinski

Annales Universitatis Mariae Curie-Skłodowska, sectio H – Oeconomia, volume 49, issue 3, pages 117–124, 2015

  • Open access
  • Literature review
  • Store brands
  • Perceived risk
  • Four decades of research
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Keywords
  • store brands
  • private label brands
  • perceived risk
  • generic brands
  • national brands
  • performance risk
  • functional risk
  • financial risk
  • social risk
  • psychological risk
  • physical risk
  • time risk
  • store brand proneness
  • store image
  • category risk
  • price-quality inference
  • premium store brands
  • private label purchase intention
  • literature review

Shoppers see store brands as riskier than national brands, and that risk lowers their willingness to buy them. This review of forty years of research explains the types of perceived risk and how retailer image, category risk and premium store brands change the picture.

Key findings

  1. Perceived risk has six main dimensions. Research distinguishes performance (functional), physical, psychological, social and financial risk, with time risk added later, each describing a different possible loss from a poor purchase (Łukasik & Schivinski, 2015).
  2. Store brands are perceived as riskier than national brands. Early studies found generic brands riskier than national brands; later work showed that perceiving store brands as riskier reduces store brand proneness and purchase intentions (Łukasik & Schivinski, 2015).
  3. Retailer image and category risk shape how buyers read store brand prices. In high-risk categories, higher store brand prices signal higher quality, and a high-image retailer raises store brand evaluations; in low-risk categories at low-image retailers, price has no effect (Łukasik & Schivinski, 2015).
  4. Premium store brands change the role of risk. High functional risk deters retailers from launching standard store brands but makes premium store brand launches more likely (Łukasik & Schivinski, 2015).

At a glance

Type
Narrative literature review of research on store brand perceived risk since the 1960s
Topics
Concept and dimensions of perceived risk; effects of store brand perceived risk on buyers’ behavior; premium store brands
Gaps
Few studies outside American and Western European markets; little research on perceived risk and store brand equity, or on premium store brands

Figure 1. Use of price information and decision-making context

High-risk categoryLow-risk categoryHigh-imageretailerThe positive relationship between price andperceived store brand quality was found. Ina high image retail environment, consumersevaluate store brands in the context of highstatus national brands.There is a positive relationship between priceand perceived quality. Both attitude andpurchase intention were lower than expectedand premium prices than at the discount price.Low-imageretailerConsumers perceive higher store brand qualityat the expected price, than at the discountprice. They perceive no gain in quality at thepremium price. A low retail image offers noassurance that the quality is sufficient.Price had no effect on either quality orattitude, because in low-risk categories,consumers are not inclined to make price-basedevaluative inferences.Based on Sheinin and Wagner (2003): how buyers use price information (discount, expected and premium prices) by category risk and retailer image.
Redrawn from Figure 1 of the article, based on Sheinin and Wagner (2003). Cell text as printed.

Tables

Table 1. Dimensions of perceived risk associated with shopping behavior

Dimension of risk Definition Cited study
Performance (functional) risk The product does not perform as expected. The product does not meet standards of quality. Jacoby and Kaplan, 1972; Dunn, Murphy and Skelly, 1986
Physical risk Consumers’ safety in using the product. Jacoby and Kaplan, 1972
Psychological risk Poor product choice harms consumers’ ego. Jacoby and Kaplan, 1972; Roselius, 1971
Social risk Product choice may result in embarrassment in front of family or friends; others will think less of a person as a result of a poor product choice. Dunn, Murphy and Skelly, 1986; Jacoby and Kaplan, 1972; Roselius, 1971
Financial risk The product is not worth the financial price. Dunn, Murphy and Skelly, 1986; Jacoby and Kaplan, 1972; Roselius, 1971

Source: Tsiros, M., Heilman, C.M., 2005. The effect of expiration dates and perceived risk on purchasing behavior in grocery store in perishable categories. Journal of Marketing 69, p. 117.

The question

Most research on how perceived risk affects consumers concerned manufacturers’ brands, and gaps remain for store brands despite four decades of work. We reviewed what is known about the concept and measurement of perceived risk for store-branded products and its main effects on buyers’ behavior.

Implications

Practical implications

Store brand managers should consider perceived risk when planning their assortment, especially in high-risk categories and where premium store brands can compete with leading national brands.

Theoretical implications

Future research should test store brand perceived risk outside American and Western European markets (e.g., Eastern Europe), link it to store brand equity and its dimensions, and study the perceived risk of premium store brands.

Limitations and future research

  • A narrative review of selected studies, without a systematic search protocol.

Questions this paper answers

Why do consumers see store brands as risky?

Consumers compare store brands with national brands and doubt their quality, so they choose national brands to reduce the chance of a poor purchase (Łukasik & Schivinski, 2015).

What are the types of perceived risk in shopping?

Performance (functional), physical, psychological, social and financial risk, and time risk (Łukasik & Schivinski, 2015).

Does price affect how consumers judge store brands?

In high-risk categories, higher prices signal higher store brand quality; in low-risk categories, consumers do not make price-based quality inferences (Sheinin & Wagner, 2003; reviewed by Łukasik & Schivinski, 2015).

Key concepts

Perceived risk
The consumer’s subjective uncertainty about the consequences of a purchase and the likelihood of a loss.
Store brand
A brand owned and sold by a retailer, also called a private label; generic brands were their earliest, unbranded form.
Category risk
The uncertainty consumers perceive when buying a particular type of product (Shimp & Bearden, 1982).

Open science and materials

How to cite

Łukasik, P., & Schivinski, B. (2015). Effects of store brand perceived risk on buyers’ behavior – four decades of research overview. Annales Universitatis Mariae Curie-Skłodowska, sectio H – Oeconomia, 49(3), 117–124. https://doi.org/10.17951/h.2015.49.3.117

Open access under a Creative Commons CC BY 4.0 licence.

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