NEW YORK — Citigroup Global Markets here is predicting private-label penetration at Wal-Mart Stores could exceed 40% over the next three years as the company replaces slow-moving brands with own-label products.
Private-label, whose penetration is approximately 16%, has historically not been an area of focus for Wal-Mart, Deborah Weinswig, the company's analyst here, pointed out. However, the expected relaunch of the company's Great Value brand this year "could serve as a catalyst" for expanding private label, she noted, suggesting that Wal-Mart could replace the slowest of three brands in a category with a private-label line, "which would potentially force branded manufacturers to be more competitive on price with Wal-Mart."
Among other predictions from Citigroup for 2009: Income from club membership fees could fall as consumers in a softening economy become less likely to sign up as new club members or renew existing memberships; and the first retailer to get the small-store format right can benefit most, with contenders including Safeway's The Market; Supervalu's Urban Fresh; Wal-Mart's Marketside; and Tesco's Fresh & Easy.
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