People talk outside a Wal-Mart Pickup supermarket in Bentonville, Arkansas.
Rick Wilking | Reuters
Walmart is introducing a new grocery brand as the discounter tries to retain the customers it attracted during a period of high inflation.
On Tuesday, the big-box retailer said it will roll out a private label called BetterGoods, a line of more trend- and chef-driven foods. Most items will be priced at less than $5.
Walmart is already the largest grocer in the country in terms of turnover. Nearly 60% of the company's U.S. revenue came from its grocery business in its most recent fiscal year.
Walmart's big food business has helped boost store and online traffic, especially as customers have watched their discretionary spending during a period of high inflation. And its low-priced reputation has helped the company attract higher-income consumers as inflation undermines budgets.
In the most recent fiscal year ending in late January, Walmart's U.S. grocery net sales rose nearly 7% year over year to $264.2 billion.
An employee replenishes frozen food items at a Walmart Inc. store in Burbank, California.
Patrick T. Fallon | Bloomberg | Getty Images
But Walmart, like other grocers, has seen room to grow its private label business as consumers look for new flavors and lower prices. During the Covid-19 pandemic, some national brands ran out of products in stores, prompting customers to buy retailers' own brands.
Later, inflation drove food and housing prices higher and inspired more consumers to try store brands, which are often cheaper. In addition, the growth of low-priced supermarket chains like Aldi, Lidl and Trader Joe's – which prominently offer their own brands rather than national brands – and the popularity of Costco's Kirkland brand have changed customers' perceptions of store brands.
Grocers have also rethought their private label approach. Instead of relying on staples like canned peas or copycat items like a cheaper box of cereal that look like Cheerios to form their store brand, retailers began introducing more unique food items.
For example, Goal launched a new grocery brand in 2019 called Good & Gather with a wide range of products including bagged salad kits, peanut butter spreads and frozen vegetables. Another grocery brand it debuted, Favorite Day, features creative versions of ice cream bars and trail mixes.
Other retailers have introduced new private labels to their aisles, focusing on affordability and fending off discounters like Aldi or Dollar General. Krogerfor example, launched Smart Way two years ago. The brand offers cheap basics such as mayonnaise and sliced bread.
Walmart's new grocery brand, BetterGoods, will consist of items in many categories, including frozen foods, dairy products and snacks, ranging from under $2 to under $15. The products fit within one of three main areas, the company said: items with more culinary flair, like a creamy corn jalapeño soup in a pot; items that are plant-based, such as a non-dairy frozen dessert made from oat milk; or items that exclude certain ingredients, such as gluten- and antibiotic-free chicken nuggets.
The new private label will join Walmart's existing collection of private labels in the grocery department, which also includes Great Value – the nation's largest privately held grocery brand by sales, according to Numerator, a market research firm.