Private brands, governance, and relational exchange within retailer–manufacturer relationships: Evidence from Irish food manufacturers supplying the Irish and British grocery markets

Abstract

This study adopts the transaction cost framework to shed light upon governance structures within the context of retailer-manufacturer relationships+ It argues that a retailer's investment in establishing itself as a retail brand is frequently based on the willingness of manufacturers to make specific investments+ Two complementary flows of quasi-rents are created, resulting in a safeguarding problem for both parties+ The appropriate governance structure is posited as a solution to this issue+ Based on an empirical analysis of 104 trading relationships between Irish food manufacturers and their Irish and British retail customers, the authors find that the degree of relational exchange or "closeness," established between food retailers and manufacturers is positively related to both parties' specific investments, perceptions of interdependency, expectations of relationship continuity and attractiveness, but negatively related to symmetric dependency and retailers' ability to sanction their suppliers+ @EconLit Classification: L220#+

From the retail brand to the retail‐er as a brand: themes and issues in retail branding research

“…There has been less of a focus, certainly in terms of the volume of published output, on the role of suppliers in retail brand growth and particularly the implications of retail brands for relationships between retailers and suppliers. Research exploring the channel perspective has focused on changing power relationships in the channel and the specifics of procuring private brands, with a particular emphasis on how retailers have begun to dominate channels and drive store brand development (Shaw et al, 1992;Bhasin et al, 1995;Collins and Burt, 2006;Cotterill and Putsis, 2001;Scott-Morton and Zettelmeyer, 2004;Johansson and Burt, 2004;Tarzijan, 2004;Oubiña et al, 2006). Yet, Soberman and Parker (2006) suggested that when both manufacturer and retailer have market power, then both may benefit from the introduction of a quality-equivalent store brand by the retailer as it can lead to higher average category prices.…”

Examination of the level of adoption of opportunistic behaviors in the supply chain in the food sector

“…Therefore, we should also consider whether specific contextual factors could significantly affect opportunism. As we previously saw, multiple retailers' own brands play significant role in their relationships with food suppliers and they could be a primary source of competitive advantage for retailers (Collins & Burt, 2006). The growth of own brands was one of the most significant factors that affected the shift of power which was traditionally held by manufacturers towards multiple retailers (Burt & Sparks, 2003).…”

“…The first case refers to the fact that due to consolidation in the retailing sector many exchange relationships are taking place between multiple retailers of big size and small suppliers (Fassin, 2005). The second refers to the success of own brand products and their increasing market shares (Collins & Burt, 2006). These issues enhanced the position of multiple retailers in the supply chain relationships.…”

“…Own brands are a powerful tool of retailers in gaining competitive advantage and positioning the retailer as a brand in the market (Collins & Burt, 2006). However, own brands also affected the supplier-retailer relationship and enhanced the unbalanced relationships between multiple retailers and suppliers in supply chains in the food sector.…”