Introduction
Walmart incorporation is an American multinational retail corporation founded by Sam Walton in 1962 and incorporated under Delaware General Incorporation Law. Walmart manages a large number of hypermarkets, discount stores, departmental and grocery stores in a chain-like structure in the United States. The company also owns Sam’s Club retail warehouses. Let us know more detail about ‘Walmart’s Private Label Strategy’.
Walmart’s Private Label Strategy
About Private Label
A private label product is said to be a product which a retailer gets produced by a third party and sells the product under the brand name in which it works. The retailer is able to control all the things related to its product or products that are produced. The retailers can control the appearance of the product, its primary and secondary packaging and other things related with the sale of the product.
These products once made are then delivered to the retailer to sell under the brand name it operates. For the consumers, these products are the same as the products made under the companies own brand. The major consumer product categories contain both branded and private label lines. For example-
- Personal Care – Shampoo and conditioners, hair and nail salons, and other establishments may sell private label products
- Grocery items – Grocery store’s brand products, etc.
- Apparels – clothing stores often sell their lines alongside branded alternatives.
- Toys and pet food – Pet stores sell food, toys, and more with their branding.
1. Adaptability
Consumers’ desires for new lines or features are complex and always changing, and it is the supplier’s duty to make sure that their products must adapt according to customer demand. This is a gradual process. But when retailers choose to opt for private label products, the process takes a faster pace. Retailers are able to react instantly if there is a visible shift in customer taste and preferences.
2. Production
Private labelling of products ensures that the retailer does not lose its right over its product during the production process. The retailer commands the manufacturer about how they want their products to turn out. They can specify things like which components are to be used, its appearance, colour or shape etc.
3. Pricing
With private labelling, retailers are in charge of the entire supply hierarchy. Retailers can set and control production costs so that they can ensure the most profitable pricing and set up the fair profit margins.
4. Branding
While selling branded products consumers develop loyalty to the producer of the products, not the firm selling the products but private label products and their packaging bear the name of the retailer and its branding.
Walmart’s Private Label Strategy
It involves the promotion of Walmart’s private brands instead of those brands which are sold nationally by retailers. It includes brands of their own and takeover other brands so that they are able to reduce operational cost and hence increase the quality of products, the motive of it is that customers get good quality items at a price which do not take a toll on consumers pocket. It primarily focuses on catering the existing customer base with low prices rather than building a new customer base by providing new and high price range products. Therefore, Walmart is offering a majority of its customers a wide variety of private label options. Ideally, this strategy focuses on increasing customer loyalty and retaining them for a longer period of time and this is because private label products majorly stay in command with the company’s core values of being a margin reducer. Walmart’s private label strategy includes strategic takeover of other brands. Although this step has been proven successful, Walmart focuses on keeping these takeover firms’ products separate from other its products. Walmart provides a variety in range from clothing to groceries under its private label brand. Some of its private label brand consist of-
1. Great Value
This brand is primarily known for quality and affordability and has more than hundred categories. This brand is recognized as the U.S’s largest food brand till now. It provides consumers with household consumption items and high-quality groceries comparable to other brands globally. The packaging of Great Value products is designed in such a way that it stays consistent with the customers and includes graphics that can be recognized easily.
2. Equate
Equate offers a variety of pharmaceuticals, health and beauty products, vitamins and supplements, lotions, hair products, and hygiene products. The entity initially operated independently until Walmart acquired it.
3. Sam’s Choice
Sam’s Choice is named after Walmart’s founder, and is the brand released in the nineties. It covered a wide range of household items but as of 2022 most of the products are rebranded under the Walmart private label brand. Presently this brand deals with biscuits, drinks, and other assorted snacks.
4. Ol’ Roy
It is one of the oldest private brands of Walmarts. It is named after the founder of Walmarts dog, Ol’ Roy, and this brand covers the store’s dog food line and its products are available at relatively cheaper prices.
5. Apparel Brands
Walmart’s private label brands consist of men’s, women’s, and children’s apparel under brand names such as Terra & Sky, George, Time and Tru, Brahma etc.
In 2022, Walmart owns a close approximation of 320 private label brands which covers almost twenty-nine thousand products. That said, Walmart has been a tough competitor among the brands which are in the same field. Walmart is working to collect inventory in such a way so that they can themselves start making its products to exceed other products globally. Walmart’s private label brands hold a whopping forty-eight per cent of all private label items sold online. This brand is still relatively new and not as advanced as its competitors as of now, but as the trade analysts analyse it is supposed to grow over the years. The retailer deals in a variety of products and to promote the sales of their product they need to collaborate with national brands to help and grow with the flow. Walmart’s private label brands carry a lot of potential with it in the long run. Walmart in the upcoming years is focusing on the development of private label strategy by introducing new product ranges. This strategy is a key part of Walmart’s expansion plan and all that is associated with the retailer market in upcoming years.
Conclusion
Private label created strategy option which is available for both online and offline retailers. This strategy is most commonly used where the vendor deals in a number of manufacturing units and to sell the products with their name and brand. One of its major advantages includes the power which it gives retailers even though goods are produced somewhere else. The retailers can control product range, profitability margin, and brand name. In conclusion, Walmart promotes its private label items so that it can maintain its low pricing strategy to retain the existing customer base as well as create a more loyal new customer base. It works on the promise “Everyday Low Prices”.
Currently, Walmart controls private label brands like Great Value, Sam’s Choice, George, and Time & Tru, etc which provide household consumption items to customers at relatively lower prices.
