The Rise of Private Labels: Exploring Price Dynamics and Market Strategies in Norwegian Low- Price Grocery Stores

Abstract

In our comprehensive study, we explore the pricing strategies of three major low-price grocery retailers in Norway, specifically focusing on their use of economy and standard private labels. Conducted from week 40 of 2023 to week 21 of 2024, our research involved detailed weekly price monitoring, thorough analysis of store flyers from Q1 2024, and in-depth interviews with representatives from two grocery retailers and four suppliers. Our aim was to understand the nuances of long-term price trends, the frequency and magnitude of short-term price adjustments, the role of store flyer promotions and the strategic application of price matching within this competitive landscape.

Our findings reveal that economy private labels are more frequently adjusted in price, significantly influencing the retailers' pricing image compared to national brands. Though not significant, we also observed that while national brands tend to undergo larger price adjustments, standard private labels experience substantial fluctuations themselves, often as part of targeted promotional efforts. Interestingly, standard private labels are prominently featured in store flyers, highlighting their strategic importance, whereas national brands tend to dominate front-page placements.

The study also delved into price matching practices across different brand tiers, finding minimal variation and yielding inconclusive results. Insights from interviews support the quantitative data, suggesting a strategic emphasis on price matching for economy private labels and national brands over standard private labels. Although our research did not fully support our hypothesis regarding long-term price development due to lack of significance in the quantitative analysis and qualitative inconsistencies, we still managed to provide significant insights in terms of store flyer promotions and price adjustment frequency, as well as useful insights from industry professionals.