Impacts of Power Structure on Introduction of Green Store Brand

Abstract

Over the past decades, the store brand has undergone a key change and achieved a remarkable improvement. Based on the industry observations, there is a wide belief that the retailers are more and more inclining to add values that cater to the consumers into their store brands. The green store brand, one kind of the burgeoning store brands, has been introduced by many retailers recently. In this paper, we investigate the conditions for retailer to introduce a green store brand and the impacts of supply chain power structure on the retailer’s product strategy. We built and solved six game models with respect to three supply chain power structures with and without the green store brand. The results show that: (i) the threshold to introduce the green store brand is lowest in RS power structure while highest in VN power structure, and the thresholds to only sell the green store brand under different power structures are the same; (ii) the green store brand may be introduced as a profitable product that has the real sale or just a threatening tool to compel the manufacturer to make a concession in wholesale price; (iii) once the green store brand is introduced, it is always detrimental to the manufacturer regardless of power structure; (iv) the green store brand can alleviate the double marginalization effect with respect to the national brand in most cases but aggravate it if the power structure is RS, and the ratio of potential margin is relatively low.