New Products Get a Running Start at Wal-Mart

Apr 30, 2002

Bentonville, Ark., has become a new-product Mecca for food marketers looking for innovative ideas and higher profits, according to Companies of all sizes, from ConAgra Foods to snack-marketer Poore Bros., are increasingly drawn to the Wal-Mart’s marketer-friendly centralized buying system and its lack of new-product shelving or slotting fees, not to mention its current reach and expansion. The chain is highly cost-efficient venue for marketers to test drive new products.

A partnership with Wal-Mart has essentially helped Aurora, which recently posted its first profit in over eight quarters, “back from its death,” according to Prudential Securities analyst John McMillin. Wal-Mart is Aurora’s largest customer, accounting for 14 percent of its 2001 revenue. Poore Bros.’ sales are likewise hinged to new product introductions at Wal-Mart. And small Canadian upstart Krave’s Candy Co. has Wal-Mart to thank for its big break.

While national brands have done well partnering with Wal-Mart, industry observers note that as the chain gains an increasing share of the food business, it may become more interested in pushing its own brands. Recent private-label efforts in baby formula and vitamins have been very successful, notes retail industry consultant Burt Flickinger.

Moderator Comment: Is Wal-Mart’s system for new product
authorization superior to that of competing retailers? [George
Anderson – Moderator

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