Wal-Mart's own label push falters

18 June 2009

BENTONVILLE, Arkansas: Wal-Mart, the US retail giant, has "met with some delay" as it seeks to expand its Great Value range of own-label products, at a time when an increasing number of shoppers are looking to trade down from higher-priced equivalents.

The company – which has been one of the few beneficiaries of the financial crisis – sells over 5,000 private label items, and announced the plan to bolster its offering earlier this year.

Alongside updating the packaging and increasing the prominence of the Great Value logo, it is "reformulating" 750 products and adding 80 new lines, from pizza to organic "cage-free" eggs.

While the discount specialist began introducing some of these products to its stores in March, and has increased the shelf space allocated to Great Value goods, it has also fallen behind its original timetable.

Almost all of the "refreshed" products should be available to customers by the end of September, later than was initially intended.

John Simley, Wal-Mart's media relations director, said this was simply a result of the Arkansas-based firm "just trying to get it right".

While the world's biggest retailer does not break out how much Great Value contributes to its revenues, JP Morgan estimates the brand has a 20% penetration rate in the company's food category.

Terry Bivens, an analyst at the asset management firm, said "industry participants believe that the lead times, breadth of the project, and complexity associated with the full launch each played a role in the delay."

He added that the fact that Wal-Mart has not met its schedule "extends investor uncertainty and concern about the ultimate impact of Wal-Mart's private label push."

The delay in the roll out of the new Great Value range could also slow the retailer's intention to develop its other store brands, such as Old Roy dog food and Parent's Choice baby formula.

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