Abstract: A study is conducted on the competition not only between direct channel and retail channel but between national brand and store brand. By considering the situation that the supplier opens up a direct channel, and the retailer gives up selling the national brand and introduce the store brand, the non-cooperative game between retailers and suppliers is investigated under six scenarios. The research draws on different Nash equilibrium strategies and profits, further exploring the impact of different parameters on the strategic choices of both sides of the supply chain. Results indicates that, the retailer gives up selling the national brand when the production cost of store brand is less than the production cost of national brand. At this time, if the production cost of national brand and the direct selling cost are small, and the production cost of store brand is close to the production cost of national brand, the supplier encroaches; otherwise, the supplier refuses to open up a direct channel.

Key words: national brand, store brand, direct channel, game theory