Walmart’s stake in steak

Walmart announced in April it is getting into the private-branded Angus steak and roast business. The retailer is teaming with ranchers, a beef processor and a cattle-feeding company to supply steaks and roasts to 500 of its stores in the Southeast beginning this fall.

But is this risky business?

From a quality standpoint, I believe the Bentonville, Ark.-based retailer can pull it off. That’s because Walmart has upped the quality of its private brands across the spectrum the last several years. That said, we’re not talking ground beef here. Providing store brand steaks and roasts is entirely different. This is something Walmart can’t mess up. From a quality control standpoint, all hands will be on deck.

What we don’t know is the name of the line, which Walmart has yet to reveal. But I don’t see Walmart selling T-bones and New York strip steaks under its Great Value private brand line. Nothing against Great Value — there are some fine products in the line — but Great Value screams low cost … and loudly.

Angus beef is regarded as high-end beef, although that classification may be waning a bit because of the proliferation of Angus beef products being sold at retail today under name brands and private label. Angus beef is now mainstream.

Still, consumers associate “Angus” with premium quality, whether they know the difference between Angus beef and other beef or not. So I envision that Walmart will make a splash with these products through a catchy brand name and upscale packaging that supports the product.

And even if the products in the line aren’t sold under Great Value, they will most likely be of great value. A reason Walmart is doing this is to control costs. Walmart most likely will be able to sell these products at a lower cost.

Another reason is transparency, which has become a huge factor in the food industry and in itself a differentiator. With its own supply chain, Walmart believes it is better equipped to offer transparency, which it is.

A key to the line’s success could be education. The line’s debut will spur more questions from consumers in regard to product origination, preparation and the difference between Angus beef and regular beef. I’m sure Walmart employees have fielded similar questions before, but the answers this time around will have to be more distinct.

If done right, this could be a huge victory for Walmart on many levels. It’s a bold initiative. If Walmart garners the reputation for the place to buy a good steak at a good price, its entire private label program could be viewed by consumers in a more positive light. If they believe Walmart can get steaks right, they will believe that Walmart can get potato chips right, too.