PL Buyer: Walmart’s Great Value Lineup – The Art of Transformation

Discussion
Sep 04, 2009
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By Kathie
Canning

Through a special
arrangement, what follows is a summary of a current article from Private
Label Buyer
, presented here for discussion.

Walmart’s betting on a revamped Great Value
lineup — and many other strategic changes — to keep the momentum going
post-recession.

In a March press release detailing the Great
Value expansion and enhancement, Walmart said it worked with several hundred
suppliers and product testing facilities to measure more than 5,250 products
up against leading national brands. The goal? To ensure Great Value quality
is equal to or better than that of these brands. It also said it changed
the formulas for 750 items — including breakfast cereal, cookies, yogurt,
laundry detergent and paper towels — and had plans to introduce more than
80 new products ranging from thin-crust pizza to organic cage-free eggs.

Walmart said back then that the new and improved
Great Value products — complete with new packaging — would begin appearing
on shelves in March, with the majority of products hitting stores by the
end of May.

Jack Sinclair, Walmart U.S.’s executive vice president,
grocery merchandise, told attendees to the retailer’s June 5 analyst meeting
that the Great Value revamp is about providing the consumer with an alternative
to, not a replacement for, the national brands.

“We’re putting a very professional team in place
who can bring products that are very clear, very well-formulated products,
very well-represented products,” he said, “but we’re very much about trying
to sell brands for less and providing great values and choices within that
range.”

Stephen Quinn, Walmart U.S.’s executive vice
president and chief marketing officer, added, “I think what we’re doing is
providing a better offering than we have in the past to that customer so
that customer doesn’t have to supplement their national brands by going to
another retailer.”

Combined, the improved product quality and the
price advantage over the national brands bode well for current economic times,
says Jim Hertel, managing partner with Willard Bishop.

“I think it’s absolutely the right thing for
them to be doing at this point in time,” he said, “and I think that there
should be a lot of apprehension, perhaps, on the national brand side about
what it’s going to take for shoppers [to come back] once good times return.”

Although testing and altering formulas to improve
quality and unifying the packaging were both “huge steps in the right direction,” Scott
Creamer, president of The Screamer Co. advertising agency, says a downside
is the packaging’s generic feel.

“That translates into a perception of low quality,” he
adds. “The all-white backgrounds and product photography have no personality,
style or intrigue. The generic feel is going to have a hard time holding
up in a post-recession economy.”

Doron Levy, president of Captus Business Consulting,
maintains that Walmart is still using the old model for private label, simply
mimicking the national brands, which he says just won’t cut it today. Overall,
even the low-price promise might not be enough of a draw for today’s discriminating
shoppers, Mr. Levy added, especially because many supermarkets’ store brands
also are very price competitive.

“If they can buy a generic ketchup that looks
better and has a better brand at Kroger, the shopper’s going to do that,” he
said. “I think what’s really the key to success in private label now is to
come up with products that don’t even compete with the national brand.”

Discussion Questions:
What do you think about Walmart’s revamp of its Great Value private
label line? How would you rate the Great Value name, the packaging,
and the its overall positioning versus national brands? Do you consider
Great Value a significant threat to national brands?

Please practice The RetailWire Golden Rule when submitting your comments.

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16 Comments on "PL Buyer: Walmart’s Great Value Lineup – The Art of Transformation"


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David Biernbaum
Guest
11 years 8 months ago

To the extent that Walmart’s Great Value brands eat away at national brand share depends very much on the category itself and the segment within. For certain commodities consumers will buy on price and value alone while in any number of categories and segments the consumer still does not share the same trust level for a private label brand as they do for the national brand.

Where brands certainly will be hurt at Walmart is in the battle for shelf space. Whereas the large national mega-brands will survive fine, I’m concerned for smaller brands and the specialties, which are somewhat likely to be replaced by Great Value products.

Bill Emerson
Guest
Bill Emerson
11 years 8 months ago

It’s always a mistake to underestimate Walmart’s ability to dominate whatever they aim at.

However, I don’t see this as all that different from any other grocer’s private label product. Nor can I imagine this strategy will bring in more customers to Walmart that weren’t already shopping there.

Consumer purchases are not logical, they are emotional. Even with the large investment by Walmart in their private label, they can’t change that fact. While there will certainly be exceptions, most consumers that buy Tide are not going to stop simply because Walmart has fielded an alternative.

The only issue I can see for the national brands is the loss of direct sales inside the Walmart store. Since Walmart will be contracting the manufacturing with some of these same manufacturers, some of them will win by taking market share from their competitors. This is not, in my opinion, a game-changer.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
11 years 8 months ago
Wal-Mart’s work on Private Label is certainly a step in the right direction. Over the last few weeks I have visited with several major retailers and reviewed some of their Private Label initiatives. What impressed me most is their focus on not only value and quality, but overall image of their Private Label brands. When you visit a Giant Carlisle, Meijer, Giant Eagle or a Stop & Shop it is clear that they are focused on creating not a Private Label, but an Own “Brand” or Corporate “Brand” that stands out. I am reading Private Label: Turning the Retail Brand Threat Into Your Biggest Opportunity and it discusses how Private Label has really become Private “Brand.” More importantly it reviews how National brands can still compete and complement a retailers Own Brand. Wal-Mart is the giant in the industry and as Jim Hertel mentioned in the article the economic conditions have certainly helped retailers like Wal-Mart. That said, I am impressed with the steps regional retailers are taking with their Own Brands. They are looking… Read more »
Ben Sprecher
Guest
Ben Sprecher
11 years 8 months ago

The Great Value Lineup is certainly thematically consistent with Walmart’s overall brand image: extreme value. Providing their shoppers with ever cheaper alternatives is what they do best, so if they can reformulate their PL to make it good enough to substitute for a more expensive national brand, that will only reinforce their overall position in the market.

My bias is to always pivot off of product questions (“is this change in a product line a good thing?”) to the associated customer questions (“…for *which* shoppers?”). Walmart, unfortunately, does not track purchases at the shopper level. I would be very interested to know whether the Great Value product line changes drive increased sales for Walmart’s best shoppers, worst shoppers, both, or neither. Are they able to increase Walmart’s share of wallet with key shopper segments? This is a real lost opportunity for better understanding the impact of this initiative.

Richard J. George, Ph.D.
Guest
11 years 8 months ago
The key to any store branding issue is to “think like a brand and act like a retailer.” I think the discussion of how private label competes with national brands is the wrong focus. Instead, retailers emphasis should be on how their own brands, whatever they may be called, fit into the organization’s marketing strategy. In the case of Walmart, Great Value offerings appear to reinforce the company’s position as the leading value retailer. However, I do agree with the comment that the packaging looks generic and may not be totally consistent with creating a positive Walmart brand perception. There is a big difference between store brand and generics. National brands need to think about how their brands not only solve consumer needs, but also how they can contribute to the differential advantage that their retail partners are striving to achieve. This is certainly a challenge given that the mantra of national brands is to achieve 100% ACV. National brands need to constantly provide innovative offerings to consumers while pursuing “non product” strategies to address… Read more »
Carol Spieckerman
Guest
11 years 8 months ago
There’s really no point debating the relevance of the Great Value brand. The jury’s in: it’s the largest food brand in the U.S.! Andrea Thomas, Walmart’s SVP of private brands, made clear in her recent presentation here in Bentonville (see our extensive blog coverage http://is.gd/2SvZK), Walmart is determined to increase the awareness of the brand with its existing customers (rather than expecting Great Value to woo the skeptics). As for the transformation, some sniff that the new packaging hearkens back to the days of “generic” private label; however, it more closely mirrors the minimalist packaging that you see in the UK (no coincidence since Walmart used a UK-based package design resource for Great Value). Target’s revised Up & Up packaging has a similar look and feel though without Walmart’s intentionally bold brand call-outs. Combining that with the brand’s deliberate visual impact in every grocery aisle makes for the can’t-miss impression that Walmart will need in order to achieve its goal of getting awareness up to the same level as purchase rate for the brand. Walmart… Read more »
Ben Ball
Guest
11 years 8 months ago
I am gravely conflicted by Walmart’s Great Value execution. I have referred to Walmart many times as the best retail marketer for one simple reason–they stick to their positioning relentlessly and drive their lowest-prices-every-day image in everything they do. With the exception of their short walkabout into “upscale” two years ago–they have executed this most basic and most demanding tenet of brand building better than most any other marketer–manufacturer or retailer. Walmart has also executed the most important element of successful Own Brand efforts well–making the Private Brand fit and reinforce your overall retail brand positioning. “Great Value”–what could be better for Walmart? And I don’t like it. I think I know why. Walmart’s original position, as Steven Quinn acknowledged, was “lowest prices on your favorite brands.” So Walmart guaranteed me the lowest price for the brand of my choice. What’s not to like? But now they want to offer me “lowest price” via their own brand. OK–it worked just fine for Old Roy and Sam’s Choice, what’s wrong with Great Value? It looks and… Read more »
Mel Kleiman
Guest
11 years 8 months ago

Whenever Walmart puts emphasis on something, it can change the playing field. Do you think they just went out and picked the first packaging someone suggested or did they do some market research? If it does not work you can bet they will play with it until they get it right.

If they can be the number one selling brand of dog food in the country, what makes you think they will not get this right over time?

Anne Bieler
Guest
Anne Bieler
11 years 8 months ago

Walmart has made the commitment to move Great Value forward as a brand, investing in product and package development. One of the biggest challenges Walmart faced was the inconsistency of their PL offerings–in some categories, their PL was excellent, others were not.

With consumers spending more at a single location for their stock-up trips, private label is a further opportunity for Walmart. Good strategy, but will depend on execution and category players. The packaging is basic and simplified, an approach embraced by several retailers. It has delivered for Publix, but not as well for others.

Should National brands be worried? Absolutely; when Walmart decides on a program, they will work and invest to refine the offering. The battle for shelf will go to the next level in many categories.

James Tenser
Guest
11 years 8 months ago

Ben’s comment was like a window into my own thoughts on this. The problem with Great Value is that its package design makes it look like exactly what it is. It’s unmistakeably Walmart, with few frills, and (I take on faith) fairly dependable “good as” quality.

But I have a hard time visualizing these packages on my kitchen counter. They don’t say anything aspirational. They would broadcast to family and guests where I shopped and what my priorities were.

OK, so they’re really not targeting folks like me. I get it. With Great Value, then, Walmart makes a conscious decision to cater to a subset of its considerable shopper constituency. The rest can buy national brands, I guess. Or store brands at Trader Joe’s, Costco, or a host of other retailers whose products don’t label me as a thrift shopper.

Kim Barrington
Guest
Kim Barrington
11 years 8 months ago
While store brands are eating into national brands in every retailer, some store brands are still better and cheaper elsewhere, similar to national brands. So what’s really new here? Nothing except more of Walmart’s saber rattling. If Walmart really wants to keep their momentum going, they will have to go back to being the low cost provider. That will keep people coming, and they’ve (aside from what is just lots of advertising to the contrary) lost that moniker, ’cause they’re just as expensive as any place else now. Better to shop at Trader Joe’s, Aldi’s (best place), item shop…or even go to the Dollar Stores. If this recession has taught people how to do anything, it is how to shop for a bargain and trust me, people KNOW how to do that. Target opened their new grocery section with lots of good pricing. Two weeks later the pricing was up but every item that had been on a coupon was out of inventory (so shoppers ARE shopping with coupons). At one point, convenience was a… Read more »
Dennis Serbu
Guest
Dennis Serbu
11 years 8 months ago

I think the ink is still wet on the packaging so it is premature to form an opinion on whether Great Value is new and improved. I will say based on a recent cross shop analysis that caught me by surprise is that Customers who purchase private label snacks only purchased non private label snacks 8% of the time. PL has a very loyal base for as far as it goes. However, our premium branded snack also only had a cross shop to other brands of 8%. What does that mean?

Premium customers are premium customers. Private Label Customers are Private Label Customers. In difficult economic times you might see uncommitted customers try Private Label, but typically will revert to branded and buying whatever is on sale.

Steve Montgomery
Guest
11 years 8 months ago

I admit I am not a frequent Walmart shopper so my view of their Great Value offer is tainted. Nor am I representative of what appears to be their target shopper.

When I go to Wal-Mart I, like Mr. Ball, am looking for a great value on a known brand. I am not seeking the lowest cost alternative in a reasonably size package.

Were I seeking a private label product I admit I would prefer something didn’t scream low price as loudly as this packaging does. I believe shelf appeal is important in private label and many of the companies out there have done a great job in up scaling their packaging encouraging me to believe the product inside merits trial. The examples in the article don’t.

Gene Detroyer
Guest
11 years 8 months ago

This is a very disappointing move by Wal-Mart. Both the name and the graphics scream old style private label. The opportunity that exists today is for the retailers to take on the brands directly. If you want a quality PL you must sound like one and look like one; it must let the consumer determine if it’s a value. Wal-Mart has the power to introduce a line of BRANDED products, but this is not it.

This may be a very successful private label program in the end, but do not pretend it is competing for the same customer as the brands.

Michelle Fenstermaker
Guest
Michelle Fenstermaker
11 years 8 months ago

In recent months, Wal-Mart has attracted a new customer segment who are finding themselves “forced” to shop down channel. They are placing more emphasis on getting great deals on the national brands they know and trust. Less is not more to this consumer who wants to feel they are getting the same quality at better price points while not sacrificing variety. This bare-bones approach to packaging and merchandising will not appeal to this segment.

Justin Time
Guest
11 years 8 months ago
Let’s face it, trading down is reality in today’s supermarket environment. Walmart shoppers are trading down to Great Value. As long as Walmart promotes the product vigorously, it can achieve great sales success. $10 billion in Great Value sales alone, is proof enough. But the proof is in the pudding, Great Value. If Walmart doesn’t package a quality, good tasting product, bad news will spread quickly. I think they are trying to abate the great success of Aldi brands. I still don’t think they can beat Aldi prices, but I feel they are going after that customer with their Great Value SKUs. Other retailers such as Great A&P, Stop & Shop/Giant and Safeway, have taken a different path, with great own-brands that cost less than the nationals and taste the same or better. A&P own-brands such as Green Way, Via Roma, Hartford Reserve, Preferred Pet, Market Spa, and Live Better are national brand equivalent, of the highest quality, at fantastic savings. And are exclusively Great A&P brands. Saving money is on the minds of American… Read more »
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