One of the world’s most successful retailers, Walmart, has increasingly introduced its private label items on its shelves. However, most customers don’t understand the ideology behind Walmart’s private labels.
So, if you’re like many people, you might be asking, what’s Walmart’s private label strategy? I was curious about the same thing and researched the matter more. Here’s what I found out!
What Is Walmart’s Private-Label Strategy In 2022?
Walmart’s private label strategy involves the promotion of Walmart’s private brands instead of the brands sold nationally by retailers as of 2022. This strategy includes introducing in-house brands and acquiring other brands to reduce operational costs, improve quality, and ultimately offer customers high-quality products at affordable prices.
If you want to find out more information on Walmart’s private label strategy, how it works, and much more, keep reading!
How Does Walmart’s Private Label Strategy Work?
Walmart’s private label strategy focuses on doubling down on the company’s offering of low prices rather than building a new customer base.
That said, the company has been offering a majority of its customers a wide variety of private label options for several years now.
Ideally, the private label strategy focuses on enhancing customer loyalty and retention since most of the private label products synchronize with the company’s core values of being a margin reducer.
Also, Walmart’s private label strategy involves strategic acquisitions of other entities such as Jet.com, Modcloth, Bonobos, and the online furniture retailer Hayneedle.
Despite their success, Walmart seems to focus on keeping these acquisitions separate from other Walmart products.
Moreover, the giant retailer has strategized on an in-house-made brand like the online furniture brand.
From apparel to electronics and groceries, Walmart offers several items under the company’s private label brand.
For example, among the most popular Walmart brands include:
Walmart’s Great Value brand is primarily known for quality choices and affordability.
Introduced in 1993, the brand has more than 100 categories and is by far recognized as the country’s largest food brand in volume and sales.
That said, the brand provides consumers with household consumable options and high-quality groceries comparable to other national brands.
With a commitment to better quality, Walmart has collaborated with testing facilities and several hundred suppliers to achieve the following:
- Tested over 5,250 products against other popular brands to ensure that Great Value products offer better quality.
- Conducted over 2,700 customer tests to compare flavor, texture, aroma, appearance, and color of Great Value products against other popular brands.
- Changed the formulas for about 750 items, including cookies, yogurt, breakfast cereal, laundry detergent, and paper towels.
- Introduced over 80 newly invented products, including fat-free caramel swirl ice cream, thin-crust pizza, organic cage-free eggs, strawberry yogurt, teriyaki beef jerky, double stuffed sandwich cookies, and more.
In addition to the product quality, Walmart has designed the packaging of Great Value products with consistent and easily recognizable graphics.
For example, the Great Value packaging illustrates more delicious food photography and easy-to-read nutrition labels.
Equate is Walmart’s private label brand that offers consumers pharmacy, health, and beauty products.
Initially, the entity operated independently with various vendors until Walmart finally acquired it.
With that, Equate offers customers over-the-counter medicines, vitamins and supplements, first aid products, lotions, hair products, toiletries, and hygiene products.
Created by Cott Beverages, Sam’s Choice is a Walmart brand released in 1991.
The brand was named after Walmart’s founder, Sam Walton, and covered a wide range of grocery items.
However, most of the products were rebranded under the Great Value brand, leaving cookies, soft drinks, and other assorted snacks under the Sam’s Choice brand.
Launched in 1983, Ol’ Roy is among Walmart’s oldest private brands.
The private label was named after Sam Walton’s dog, Ol’ Roy, covering the store’s dog food line and is a lower-priced alternative.
Further, Ol’ Roy is America’s best-selling dog food brand, manufactured by Doane Pet Food.
Walmart’s private offerings include men’s, women’s, and children’s apparel under brand names such as:
- Terra & Sky
- Time and Tru
- Athletics Works
- Wonder Nation
How Many Private Label Products Does Walmart Have?
Walmart has approximately 319 private labels that cover 29,153 products from across 20 different categories.
Technically, Walmart offers more private label products than its competitors Kroger and Amazon.
That said, the Auto and Tires category is among Walmart private labels with the highest number of products, with about 5,208 products.
Moreover, other major product categories include the Party and Occasions department, with approximately 4,848 products, and Clothing, Shoes & Accessories with 4,936 products.
What Are The Advantages Of Walmart’s Private Label Strategy?
Walmart’s private brand strategy is now part of its growth thesis since the company has been increasing efforts of its private brand portfolio.
With a great need to appeal to its customers, Walmart is working on its inventory mix to include making and procuring its goods and bypassing other national brands.
However, the profit margins are often lower when the company invests in private labels; hence Walmart’s private brands push for higher profits margins.
Ideally, private brands generate twice as much margin for Walmart as third-party brands do.
Why Does Walmart Promote Private Brands?
That said, the giant retail store has collaborated with celebrities like Ellen DeGeneres, Sofia Vergara, and Drew Barrymore to launch and promote newly introduced private brands.
Essentially, the primary purpose of getting these celebrities on board to promote Walmart’s private brands is to inform customers of the unique designs.
Additionally, promotional activities with celebrities create a platform for customer engagement when featured in live shopping events and social media content.
What Percent Of Sales Are From Walmart Private Label Brands?
Walmart’s private label brands held a 48% share of all private label items sold online in the US in a fiscal year.
Also, the company manages to earn from private label items, with Great Value leading in sales with more than $27 billion annually.
That said, Walmart’s high market penetration and omnichannel offerings have greatly enhanced Walmart’s high sales in private label brands.
In conclusion, Walmart promotes its private label items to maintain its low pricing strategy and uphold the “Every Day Low Prices” promise.
Currently, Walmart successfully operates private label brands like Great Value, Sam’s Choice, George, and Time & Tru, which provide essential items to customers at traditionally lower prices.