A Comparison of Apparel Garment Prices By National, Retail, And Private Labels

Abstract

Although it is generally acknowledged that brand name merchandise costs consumers more than private label merchandise, the reason for this difference is unclear. Are brand name items priced higher because they have different characteristics than private labels? Also, if items have similar characteristics, how much more do consumers pay for brand name merchandise? The purpose of this research was to examine the effect of brand name on the price of apparel while accounting for variations in product attributes. Based on the characteristics model of demand, a hedonic price equation was estimated using data collected on a sample of sweaters from moderately priced stores in a midwestern town. The results indicated that, while holding fiber content, styling, and country of origin constant, both national name brands and retail-store brands were priced higher, on average, than private labels. These results have implications for consumers and retailers. In particular, it may behoove private label retailers to augment their efforts to inform consumers about the attributes of their product relative to brand or retail-store names, given the price differential.