Brand Strategy – Retailing- March, 2009
What is ‘Great Value’ brand?
In 1993, Wal-Mart launched the Great Value store brand. ‘Great Value’ is the largest grocery brand and the biggest brand that Wal-Mart has with thousands of products spanning 100 categories. Wal-Mart has more than 5,250 of its Great Value private-label products.
What did Wal-Mart do to its store brand?
Wal-Mart improved its private label offering – the Great Value line of products. Wal-Mart worked with both the suppliers and its customers for over a year to assess the quality of more than 5,250 of its Great Value private-label products against top national brands.
Features of Wal-Mart’s Brand Makeover:
- Altered the formulas for 750 everyday items, mostly foods. E.g. The kids’ breakfast cereal was made crisper.
- Product Innovation: Introduced new products which were designed using consumer feedback. Wal-Mart trained customers to do comparisons and give feedback on what they were looking for. E.g. New unusual flavors like mocha mud slide and cake batter introduced in the Great Value all-natural ice cream range. 80 new products under the Great Value line, such as thin-crust pizza, fat-free caramel swirl ice cream, and organic cage-free eggs.
- New packaging design to provide a more consistent, consumer-friendly image. E.g. More prominent nutritional information with nearly all labels in both English and Spanish languages.
Why did Wal-Mart overhaul its oldest and biggest store brand?
Private Label Store Brands vs. National Brands
Consumers prefer buying private label store brands instead of national brands in times of economic uncertainty. Why? Simple, because they match the quality of national brands and that too at lower prices. Data tracker Nielsen reported that, in 2008, sales of private-label items increased 10% compared to a 2.6% increase for branded goods. An industry trade group, the Food Marketing Institute found that, in 2008, around 64% of buyers (59% in 2007) said they often or always preferred a store brand as compared to a national one. This is an indication that the initial hesitation shoppers had towards store brand products is disappearing and very quickly.
Advantages of Private-label brands/products
- Typically cost less (5% to 20%) than name-brand products.
- Higher profit margins for retailers owing to lower overhead costs and zero marketing expenses.
How private labels are faring at other retailers?
- Kroger’s private-label collection set a new record when it touched 27% of overall sales in its most recent quarter.
- Safeway’s ‘O Organics’ store brand is very successful. The retailer is now licensing it for use by other retailers.
Keywords: Wal-Mart, groceries, retailing, generic label, private label store brands, brand strategy, national brands
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