How Hard Discounters Can Build or Damage National Brand’s Equity

Written by Shirin Yazgulieva (IMT Atlantique)

For years, hard discounters have carried a certain reputation: low prices, narrow assortments, products stacked in cardboard boxes, and a ruthless focus on efficiency. For many national brands, appearing on those shelves felt risky; perhaps even damaging. Would consumers still see a national brand as high quality if they found it next to bargain detergent and discount frozen pizza?

That question fascinated Joep van der Plas, Inge Geyskens, and Marnik G. Dekimpe, whose research examines the brand-equity implications of selling national brands through hard discounters. The authors investigated whether entering a hard discounter weakens or strengthens the brand equity.

The answer is nuanced: hard-discounter listings often help national brands, but the effect depends strongly on category characteristics.

The Question Started with a Contradiction

The idea for the study emerged from a contradiction Joep noticed while working on his dissertation research. Hard discounters were increasingly adding national brands to their assortments, even though many national-brand managers remained hesitant about participating. That tension immediately stood out.

“On the one hand, brand image might suffer. But on the other hand, broader distribution could increase awareness. So, I started wondering what the net effect on brand equity actually is.”

     - Joep van der Plas

That curiosity became the foundation for a large-scale investigation into one of retail’s most uncomfortable strategic questions: does selling in a down-market retail format make consumers think less of a national brand?

The expansion of hard discounters has been visible for decades. What makes the research timely is the changing relationship between these retailers and national brands. Hard discounters are increasingly opening their shelves to national brands. This creates a pressing strategic dilemma: greater distribution may expand a brand’s reach, but appearing in a discount environment may also alter how consumers perceive it.

As the paper explains, managers worry that national brands may suffer from hard discounters’ austere selling environment. The central question is whether the retailer’s low-cost image transfers to the brand itself.

The Great Brand Equity Dilemma

The study focuses on brand equity, a central yet inherently complex concept in marketing. Brand equity is the added value consumers attach to a brand name itself – the reason people choose Coca-Cola over a generic cola, or Nike over an unbranded sneaker. The stronger the equity, the more loyal and less price-sensitive consumers become.

The researchers identified two competing forces that could emerge when brands enter hard discounters. The first is visibility. Consumers may already know many national brands, but wider distribution creates additional opportunities to encounter them and keeps them more prominent in shoppers’ minds. This can make the brand more likely to be recalled and considered at the point of purchase. For some brands, especially in frequently purchased categories, that additional visibility can strengthen awareness.

The second is image spillover. Retail environments influence perception. A premium brand placed inside a down-market shopping environment might diminish its image. Consumers could unconsciously associate the retailer’s low-cost identity with the national brand.

The challenge for Van der Plas was that both arguments sounded equally plausible: it was unclear which force would ultimately dominate.

“There are very good reasons to expect a positive effect, while also very good reasons to expect a negative effect. That’s actually what made the research so interesting.”

      - Joep van der Plas

The Following Brands Across the Grocery Market

To determine what happens after a national brand enters a hard discounter, the team analyzed ten years of purchasing data across an entire grocery market. This allowed them to track about 150 brand-category combinations across a wide range of product categories before and after a hard-discounter listing. They first estimated brand equity using the intercept approach. The intercept in their model reflects a firm’s ability to capitalize on its brand name to generate sales. For every listed brand, they then constructed a benchmark from similar brands that had not entered hard discounters. This benchmark indicated how the listed brand might have developed without entering the discount channel. By comparing the brand’s actual development with that of the benchmark alternative, the researchers assessed the brand-equity effect of the hard discounter’s listing.

The Surprising Result: Most Brands Actually Benefit

The findings challenged the widespread concern that entering hard discounters would weaken brand equity. For 69% of the hard-discounter listings studied, the model predicted an increase in brand equity. Here, an increase means that the hard discount listing builds brand equity. Another 21% of listings showed no significant change, while 10% were associated with a decline in brand equity.

The researchers also used their model to estimate what had happened to the 225 national brands that did not enter hard discounters. The analysis shows that 80% of the brands that stayed out of hard discounters have missed an opportunity to strengthen their equity. Finally, the authors also explore heterogeneity. They find that the brand-equity effect is stronger for brands in less utilitarian categories, and in categories characterized by higher purchase frequency and lower household penetration.

Where the Research Goes Next

For the authors, hard discounters remain an important research arena as national brands take on a larger role in assortments once dominated by private labels. Several questions remain unresolved. The researchers measured changes in overall brand equity, but their data did not allow them to determine how much came from greater awareness and how much from changes in brand image. Understanding the relative importance of these mechanisms would help explain why some brands benefit from hard-discounter listings while others do not.

Read the paper

Interested in the full study and all methodological details? Read the full paper here.

Want to cite the paper?

van der Plas, J., Geyskens, I., & Dekimpe, M. G. (2026). The brand-equity implications of selling through hard discounters. International Journal of Research in Marketing.

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Meet Joep van der Plas

What is one marketing concept you would keep above all others?

If I just had to retain one concept, it would be brand equity. Strong brands are not only better able to attract and retain customers, but they also have more pricing power. It’s no surprise that managers see brand equity as a top priority. 

If you were not in academia, what would you be doing?

When I was very young, I wanted to become a pastry chef. But then I realized that pastry chefs have to wake up very early, which made me reconsider. If I weren’t in academia, I would most likely have become a data scientist. But I really enjoy the flexibility of academic life – and I’m happy I don’t have to wake up early.

This article was written by

Shirin Yazgulieva

Ph.D. candidate at IMT Atlantique (France)