Tapping the potential space-positioning of private labels

Purpose The purpose of this study is to analyze the current scenario of private labels from consumers and retailers' point of view and provide inputs to the retailers that will help them to increase their profitability. Profitability for retailers is a resultant of efficient inventory management in a limited space. This paper studies consumer's purchase behavior and facilitates retailers in their decision-making of the dilemma between the appropriate mix of national brands (NBs) and private labels to increase their profitability. Retailers will be able to do cross-merchandising of the categories of the goods having strong associations and will increase the shelf space of the products, which are preferred by customers. Design/methodology/approach Market basket analysis was done for 1,223 transactions including two or more product categories in each transaction. In total, 564 products were studied and these products were further divided into 23 categories. Lift analysis was done 4 times to find an association between the products of all the categories. Findings The results find a strong association between some categories and advocate the placement of these combinations together - one being a NB and another private label. Originality/value The analysis of sales transactions will help retailers in determining the associations between product categories. This association will be helpful in placing their private labels vis-a-vis NBs to do cross-merchandising and allocating judicial space to the product assortment to increase their profitability.