Walmart's Big Bet on Private Brands: A Sign of the Times
In April 2024, Walmart debuted its bettergoods private brand, a new line the retailer hoped would hit the $3 billion mark annually. The brand values appear unique compared to its wider portfolio and it has the potential to be a disruptor in the market if it quickly resonates with consumers. Products in the line are said to combine great taste with chef-inspired culinary creations while offering a unique focus on innovative flavors, plant-based foods, and free from ingredients of concern.
Walmart is committed to bettergoods with a strong innovation pipeline and engagement from suppliers to establish the brand with its estimated 300 SKUs. Early indications are the competitive pricing strategy where products are priced from $2 to $15 ensures affordability of the bettergoods range that will resonate across Walmart’s current customer base while reflecting the current economic challenges being faced in the U.S. Notably the depth of the range touching high usage or frequent purchase categories ensures accelerated familiarity and a fast roadmap to cultivating a different consumer than the core Walmart shopper.
Launching a new brand in today’s environment requires a deep understanding of the consumer and this is where the Walmart strategy looks interesting. Is part of the goal to offer great tasting affordable food in an expansive brand that has appeal to consumers that are less committed to Walmart than other consumer groups? Or, is Walmart targeting the growing budget-focused foodie consumer that thrives in Trader Joe’s or Kroger but can’t stretch to Whole Foods?
A recent article from Fast Company used the term elevated culinary experiences, and the new range enables this drive on taste while avoiding complications to the wider Walmart product portfolio and customer proposition. The brightly colored easily identifiable branding supports the rapid presence building across multiple categories making it easier to shop in-store.
Another important factor in its success or rate of growth will be Walmart’s online strength and greater customer reach. Walmart's market share is +30% of brick-and-mortar CPG private brand sales in the U.S. and +40% of online CPG private brand sales in the U.S.
Additionally, the root of the new brand and the significant investment that comes with it could also be a defense strategy against Aldi’s aggressive expansion plans. When one looks at the growth and success of Aldi in markets such as the United Kingdom and Australia, the defense strategies in both markets of the established retailers have been significantly different and achieved outcomes at different paces.
Aldi has a strong reputation for winning consumer awards for quality as independent endorsements to build customer trust. But the bettergoods strategy is different, disruptive, and bold, and it takes the battle for great tasting affordable food with a clear customer message to Aldi and the discount market in a new way. This is an exciting element of a wider strategy to watch closely as the U.S. market becomes increasingly competitive and private brands are a critical element driving top-line growth, which should ultimately benefit many U.S. consumers.
It is evident that retailers and manufacturers in the private brands industry have an enormous interest in Walmart and Aldi. The ability to predict the market and learn from mature private brand markets such as the U.K. and Australia where Aldi has been both successful and challenged could be an advantage to U.S. retailers and manufacturers.
There are strong growth opportunities for those who want to make an investment in supporting the transformation of private brands and help lead the next generation of store brand products. Walmart has taken the first step and looking for others to help continue this strategic approach.
Deena Pitzele is a partner with The Partnering Group and is a former chief commercial officer turned private brand growth consultant. She has helped several private brand manufacturers scale and grow exponentially as both a commercial leader and consultant.
Mark Field is the director and founder of Prof. Consulting Group, a food and grocery consultancy. Headquartered in Melbourne, Australia, the company also has a network of offices in the United States and Europe.
