Wal-Mart adds private-label brand

Wal-Mart Stores Inc. is adding a new private label for food and consumables to its shelves, one that will offer products at the lowest price possible, a company representative said Monday.

The new brand is called Price First and will be available in more than half the company’s roughly 4,300 U.S. Wal-Mart stores over the next few months. Arkansas is included in the rollout.

Wal-Mart spokesman Danit Marquardt said Price First goods include mayonnaise, peanut butter, pasta, toilet tissue, trash bags and other products at a price lower than the retailer’s other store brands, such as Great Value, Sam’s Choice, Marketside and Equate. About 50 Price First products were tested in 200 or so stores in the Mississippi Delta over the past year, and the company will soon expand distribution to more than 2,500 stores across the country.

Doug Baker, vice president of private brands for the Arlington, Va.-based Food Marketing Institute, said a retailer’s rock-bottom price point is usually a result of it working with a supplier to develop a product that fits the price. It may also be the supplier that comes up with a less expensive product.

“They’re both probably giving up margin in order to be able to achieve a price strategy, but because the ingredients are different or they have more flexibility than the national-brand equivalent, they’re able to achieve that lower retail,” Baker said.

He used apple juice versus apple concentrate as an example.

It’s not uncommon for a retailer to have multiple tiers of store-brand products

— a movement that became prevalent when the economy starting sinking in 2008. Most carry an opening price point tier, a price tier that is equiv- alent to a name brand but packaged differently and a specialty tier, which includes organic or natural foods and other items that are more like luxuries than necessities.

“For retailers, one of the most significant shifts in value-seeking behaviors is how customers changed their approach to private label or store brands during the recession,” researchers contributing to the U.S. Grocery Shopper Trends 2012 said.

The report found nearly two-thirds of consumers indicated they had always been comfortable buying private label or store brands. But during the recession, an additional 27 percent, representing 31 million households, said they were comfortable with these brands.

About 14 percent of respondents said they plan to continue their private label behavior post-recession, representing an additional 16 million households that buy private label brands.

“Seventy percent of the population is looking for discounts, and that’s at every socioeconomic level,” Baker said.

Wal-Mart’s sales have stagnated for more than a year, and executives have pegged it on the struggling consumer and the reduction in the government’s Supplemental Nutrition Assistance Program, or SNAP, that took effect in November.

During an Aug. 14 earnings call with other members of Wal-Mart management, President and Chief Executive Officer Doug McMillon said, “In an environment where customers have so many choices about where to shop and how to buy, and many of them are feeling pressure on their budgets, we have to be at our best. That’s why it’s so important for us to deliver a compelling customer proposition of low prices and quality service for every transaction.”

The company describes Great Value as national brand quality at a value; Sam’s Choice and Marketside are considered “premium” brands. Wal-Mart’s private label brands spread across multiple categories, not just grocery and consumables. Equate is a familiar store brand found in the category of personal care.

“The goal of Great Value, as well as Marketside and some of our other private label products, is to fill a void in the marketplace,” Marquardt said. “They serve different purposes.”

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