Wal-Mart Revamps Private Label

MARK HAMSTRA

The line has been given a new look and includes 80 additional products.

BENTONVILLE, Ark. — Wal-Mart Stores here last week took the wraps off its revamped Great Value private-label line, which has been reformulated, expanded and given a new look.

The line, which Wal-Mart notes is the largest food brand in the nation, has been augmented with more than 80 new products, including thin-crust pizza, fat-free caramel swirl ice cream, strawberry yogurt, organic cage-free eggs, double-stuffed sandwich cookies and teriyaki beef jerky. More than 750 items in the 5,250-product line have been reformulated.

Analysts differed on the significance of the private-label push, with some saying it could pose a serious competitive threat for traditional food retailers, and others questioning its significance — and even whether or not it was a smart strategic move by Wal-Mart to shift away from a focus on national brands.

In an interview with SN last month before the launch, Karen Short, an analyst with Friedman, Billings, Ramsey & Co., New York, said she didn't expect the impact of the company's new push to be significant, but she noted that Wal-Mart does have room to improve its private-label penetration. In addition, the company may see an enhanced private-label line as a means to increase price leverage with national-brand suppliers.

Wal-Mart currently generates about 16% of its grocery sales from private label, compared with the 27% that Cincinnati-based Kroger Co. recently reported for its fourth quarter.

Other analysts noted that Wal-Mart historically has emphasized its status as offering the lowest price on national brands, leading some to question just how much the retail giant would be willing to focus on the Great Value line.

Expanding private label at the expense of branded product doesn't really jibe with Wal-Mart's EDLP heritage, Andrew Wolf, an analyst with BB&T Capital Markets, Richmond, Va., pointed out, “because private-label items don't allow head-to-head comparisons” with the offerings of other retailers.