Private Label Price Rigidity during Holiday Periods

Georg Müller, Strategic Pricing Group

Mark Bergen, University of Minnesota

Shantanu Dutta, University of Southern California

Daniel Levy, Bar-Ilan University

Abstract. Using weekly retail transaction scanner price data from a large U.S supermarket chain, we find significantly higher retail price rigidity for private label products than for nationally branded products during the Christmas and Thanksgiving holiday periods relative to the rest of the year. The finding cannot be explained by changes in holiday period promotional practices because we find that private label promotions appear to diminish at least as much as national brands. The increased rigidity of private label products relative to national brands is only partially accounted for by increased rigidity of wholesale prices. After ruling out other potential explanations, we suggest that the higher private label price rigidity might be due to the increased emphasis on social consumption during holiday periods, raising the customers’ value of nationally branded products relative to the private labels.

JEL Codes: E12, E31, L11, L20, L16, M21, M31

Key Words: Price Rigidity, Holidays, Private Label, National Brand, Social Consumption