Wal-Mart in own-label push

17 March 2009

BENTONVILLE, Arkansas: Wal-Mart, the US retail giant, is relaunching its own-label offering, Great Value, adding new lines and redesigning its packaging, as it seeks to take advantage of changing consumer spending habits.

Despite the overall downturn in the US retail market, Wal-Mart has posted regular increases in revenue, and it is predicted to be one of the few "winners" of the current economic crisis.

The company, which already sells over 5,000 own-brand items, is to add 80 new lines, as well as modifying the packaging across its range to feature the Great Value brand more prominently, and "reformulating" 750 products.

The Private Label Manufacturers Association reported that sales of private-label food and consumer products rose by 10% to $82.9bn (€63.9bn; £60.0bn) last year in the US, compared with an increase of 2.8% for branded lines, as measured by Nielsen.

Wal-Mart's private label lines are responsible for around 16% of its total food sales, compared with almost 50% of sales for UK grocery giant Tesco.

Andrea Thomas, senior vice president of Wal-Mart, said the company would remain committed to national brands, and the new offering was "just giving customers another choice."

She added that while Wal-Mart's own brand goods will cost between 5% and 20% less than national brands, while some will even "price at more of a gap".

However, Citigroup retail analyst Deborah Weinswig predicts that sales of Wal-Mart´s own-label goods could equate to up to 40% of total US grocery sales over the next three years.

She also argued that "the brands that are really being hard-balled are all of a sudden going to start to see their market share start to dwindle."

Data sourced from Wall Street Journal/Financial Times; additional content by WARC staff