The Effect of Perceived Risk Dimensions on Purchase Intention: An Empirical Evidence from Indian Private Labels Market

Abstract

Purpose: The purpose of this paper is to examine the dimensions of perceived risk, which influence consumers' purchase intention toward the retailers' private labels. Based upon the previous literature, majorly four dimensions of the perceived risk have been considered for the study. These include – perceived functional risk, perceived financial risk, perceived physical risk and perceived psychological risk.

Design/methodology/approach: Data have been collected by proceeding with mall intercept method and approached shoppers with the questionnaire at the outlets of large Indian retailers – Reliance retail, Aditya Birla's More, Big Bazaar and Spencer's. A total of 352 valid questionnaires were obtained, wherein responses were recorded on Likert-type scale anchoring five-points where 1 indicates strongly disagree and 5 indicates strongly agree. Then, the analysis was carried out by using Exploratory Factor Analysis and Multiple Regression Analysis.

Findings: Findings of this study revealed that perceived functional risk, perceived financial risk, perceived physical risk and perceived psychological risk have the direct negative and significant effects on consumers' intention to purchase retailers' private labels. Thus, all the hypotheses were accepted and all the findings of this study were in line with previous studies.

Research limitations/implications: A limited set of product categories and brands were analyzed.

Practical implications: This study is of great interest for large retailers who wish to increase their private labels' value proposition, with an in-depth understanding of these risks it could alter their value proposition accordingly and create more successful private labels in the market place.

Originality/value: This study is one among the very few studies which addressed the research on purchase intention toward private labels in Indian context.

Keywords: Purchase intention, Perceived risk, Private labels, Multiple regression analysis, Perceived financial risk, Perceived functional risk, Perceived physical risk, Perceived psychological risk

JEL Classification: M30, M31, M37