WALMART’S EVOLVING PRIVATE LABEL STRATEGY

With Walmart reported to be abandoning its Price First entry-level range, and ending its agreement with Wild Oats for organic items, we look at how the retailer’s private label strategy is evolving.

Critical element of strategy to enhance price competitiveness with discounters

There was an expectation that we would see some major changes this year to Walmart’s private label line-up. The retailer’s senior leadership in the US started to indicate last year that private label items would have a stronger role as part of the category mix. Greg Foran, the retailer’s president and CEO, stated that while the Great Value brand and product is an area of strength for the business, in some areas, pricing was not competitive. Evolving the entry-level offer is a key way to address this and has been area which Walmart has been focused on, particularly given the growing competition from discounters, particularly Aldi, where the product offer is almost entirely private label.

Signalling the end of generic entry-level ranges?

The move away from Price First may form part of its strategy to compete more effectively with Aldi, and prepare for Lidl’s market entry in 2018. The discounters typically operate with a range of category specific private brands, rather than a banner specific approach. RecentlyTesco in the UK introduced new entry-level brands in seven fresh food categories, replacing its ‘Everyday Value’ brand. Branding and packaging of the new range stands out on shelf and communicates quality and provenance connotations, through the sourcing cues provided by the individual farming related brand names, alongside low prices.

Learnings from Canada: integrating organics into Great Value range

It has also been reported that the retailer is to end its partnership with organic brand, Wild Oats. The Wild Oats brand was re-launched at Walmart two years ago as part of its plans to improve the affordability of organic ranges through creating a new price position for them. Partnering with Wild Oats enabled the retailer to build scale in the category quickly, in line with growing consumer demand. At the end of last year Walmart Canada launched a range of organic items under the Great Value brand and could be the model that Walmart will replicate in the US. Moving to this model should enable it to deliver a strong price proposition for organics, a key growth and competitive segment in the US market.

Walmart Canada’s private label offer also includes a small number of Price First products, and the ‘Our Finest’ premium range of products. In addition, Walmart can draw on significant food private label expertise from its international operations, including Asda-Walmart in the UK.