Mind the gap: National brands’ sensitivity to price and line-length differentials at hard discounters versus conventional retailers

Hard discounters are increasingly selling national brands that previously were only sold through conventional retailers. While this trend is gaining traction across various product categories and countries, the marketing literature has provided scant empirical evidence on the market-response effects of these brands at hard discounters, while conceptual perspectives remain conflicting.
Using an empirics-first approach, the authors address this gap by offering a rich set of First Insights into the price and line-length elasticities of national brands at hard discounters, compared to conventional retailers. They analyze data from over 1,200 national-brand listings across eight European hard discounters and 84 product categories in six countries. They examine two primary differentials: the national brands’ price and line length relative to private labels within the same format (within-store gaps) and compared to their own offering in the other format (between-store gaps).
Similar to conventional retailers, price adjustments at hard discounters have a much more pronounced impact on national-brand sales than changes in line length. However, other findings at hard discounters diverge markedly from those commonly observed at conventional retailers. At hard discounters, consumers exhibit similar responsiveness to changes in both within-store and between-store gaps, unlike in conventional retail settings where within-store reference points are typically more influential than their between-store counterparts. While national brands’ responsiveness to within-store gaps is roughly the same at hard discounters and conventional retailers, their responsiveness to between-store gaps is more than twice as pronounced at hard discounters. While these findings are consistent across four product classes, they show less stability across the six countries, highlighting the need for future research to explore country-specific boundary conditions.