People talk outside a Wal-Mart Pickup-Grocery in Bentonville, Arkansas.
Rick Wilking | Reuters
Walmart is debuting a novel grocery brand as the discounter tries to retain customers it attracted during a period of high inflation.
On Tuesday, the big-box retailer said it would launch a private label called BetterGoods, a line of more fashionable and chef-driven products. Most products will be priced under $5.
Walmart is already the nation’s largest grocery store by revenue. Nearly 60% of the company’s U.S. sales in the last fiscal year came from its food business.
Walmart’s enormous grocery business helped it drive traffic to stores and online, especially as customers watched their discretionary spending during a period of high inflation. A reputation for low-cost stores has helped the company attract higher-income customers as inflation strains budgets.
In its most recent fiscal year, which ended in slow January, Walmart’s U.S. grocery net sales rose nearly 7% year-over-year to $264.2 billion.
An employee restocks frozen foods at a Walmart Inc. store. in Burbank, California.
Patrick T. Fallon | Bloomberg | Getty Images
But Walmart, like other grocery stores, has found room to grow its private label business as customers seek novel flavors and lower prices. During the Covid-19 pandemic, stores ran out of products from some national brands, which resulted in customers turning to retailers’ own brands.
Later, inflation drove up food and housing prices and inspired more shoppers to try store brands that are often cheaper. Additionally, the rise of low-cost grocery chains such as Aldi, Lidl and Trader Joe’s – which overwhelmingly offer private label rather than national brands – and the popularity of Costco’s Kirkland brand have changed customers’ perceptions of store brands.
Grocery stores have also changed their approach to private labels. Instead of relying on staples like canned peas or copycats like a cheaper box of Cheerios-like cereal to establish a store’s brand, retailers have begun to introduce more unique food products.
For example, Objective in 2019, it launched a novel grocery brand called Good & Gather with a wide range of products including bagged salad kits, peanut butter spreads and frozen vegetables. Another grocery brand it debuted, Favorite Day, is a imaginative take on ice cream and trail mixes.
Other retailers have debuted novel private labels in their grocery aisles, focusing on affordability and fending off discounters like Aldi and Dollar General. HooksFor example, launched Astute Way two years ago. The brand offers affordable basic products such as mayonnaise and sliced bread.
Walmart’s novel grocery brand, BetterGoods, will feature items across multiple categories, including frozen foods, dairy and snacks, ranging in price from under $2 to under $15. The company says the products will fit into one of three main areas: products with a more culinary focus, such as jarred creamy jalapeño corn soup; plant-based options like a pint of dairy-free oat milk frozen dessert; or products that exclude certain ingredients, such as gluten-free and antibiotic-free chicken nuggets.
The novel private label will join Walmart’s existing collection of private brands in the grocery department, which includes Great Value, the nation’s largest private grocery brand by revenue, according to market research firm Numerator.
