People talk in front of a Wal-Mart Pickup-Grocery store in Bentonville, Arkansas.
Rick Wilking | Reuters
Walmart is launching a new grocery brand, as the discounter tries to retain the shoppers it attracted during a period of high inflation.
On Tuesday, the big-box retailer announced it would launch a private label called BetterGoods, a line of trendier, chef-focused foods. Most items will cost less than $5.
Walmart is already the nation’s largest grocer by revenue. Nearly 60% of the company’s U.S. sales came from its grocery business last fiscal year.
Walmart’s large food business helped it drive traffic in-store and online, especially as customers monitored their discretionary spending during a period of high inflation. And its reputation for low prices helped the company attract higher-income buyers as inflation squeezed budgets.
In the most recent fiscal year that ended in late January, Walmart’s U.S. grocery net sales increased nearly 7% year over year to $264.2 billion.
An employee restocks frozen food items at a Walmart Inc. store in Burbank, California.
Patrick T. Fallon | Bloomberg | Getty Images
But Walmart, like other grocers, saw opportunity to expand its private label business as shoppers seek new flavors and lower prices. During the Covid-19 pandemic, products from some national brands ran out of stock in stores and prompted customers to start buying retailers’ own brands.
Later, inflation pushed up food and housing prices and prompted more consumers to try store brands, which are often cheaper. Additionally, the growth of discount grocery chains like Aldi, Lidl and Trader Joe’s – which highlight their own brands rather than national ones – and the popularity of Costco’s Kirkland brand have changed customer perceptions of with regard to store brands.
Grocers have also revamped their approach to private labels. Instead of relying on staples like canned peas or copycat products like a cheaper box of cereal that looks like Cheerios to build their store brand, retailers have begun launching more unique food products .
For example, Target launched a new grocery brand called Good & Gather in 2019 with a wide range of items, including bagged salad kits, peanut butter spreads and frozen vegetables. Another grocery brand she launched, Favorite Day, is made up of creative takes on ice cream bars and trail mixes.
Other retailers have launched new private brands in their grocery aisles, focused on affordability and fending off discounters like Aldi or Dollar General. Kroger, for example, launched Smart Way two years ago. The brand offers basics at low prices like mayonnaise and sandwich bread.
Walmart’s new grocery brand, BetterGoods, will feature items in many categories, including frozen foods, dairy and snacks, ranging from under $2 to under $15. The products will fit into one of three main areas, the company said: items with more culinary flavor, like a potted creamy corn jalapeño chowder; plant-based products, like a pint of dairy-free oat milk frozen dessert; or items that exclude certain ingredients, like gluten-free and antibiotic-free chicken nuggets.
The new private label will join Walmart’s existing collection of private brands in the grocery department, which includes Great Value – the nation’s largest grocery private brand by revenue, according to Numerator, a market research company.
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