Magazine article Marketing

Mark Ritson on Branding: Wal-Mart's Great Value Leap

Magazine article Marketing

Mark Ritson on Branding: Wal-Mart's Great Value Leap

Article excerpt

The US retailer has overhauled its popular own-label offer as consumers seek more for their dollar.

So, do you fancy yourself as an expert on branding? You should have no problem with the following question, then. What's the biggest FMCG brand in America?

The answer isn't Coke, Gillette or J&J - it's Great Value, Wal-Mart's own-label range. Thanks to its presence in every one of Wal-Mart's 4100 US stores, and the fact that more than 5000 stock-keeping units are sold under the Great Value label, it is the biggest grocery brand in the US by both sales and volume.

And it's about to get a lot better. Wal-Mart has announced the conclusion of a year-long project to improve the appeal of its own-label line. The world's biggest retailer doesn't do anything on a small scale, and has conducted 2700 consumer tests to guide the overhaul. The result is a range of product introductions, improved formulations and fresh packaging.

It's a massive strategic operation, but one that was long overdue Own-label success has never been one of the items on Wal-Mart's astonishing list of achievements. Currently, only 16% of its sales come from this area. That's well behind other US food retailers such as Krogers and Safeway, which attribute about a quarter of their sales to own-label products. It's even punier when contrasted with Tesco, which earns half its sales from own-label, and Aldi, where the figure is 94%.

That's why Wal-Mart, which typically hires from within, went outside the company and country last year to recruit Jack Sinclair, a Scottish marketer with Safeway and Tesco experience, to oversee the overhaul.

Traditionally US consumers have exhibited greater manufacturer-brand loyalty than Europeans. Own-label sales in the US have consequently been limited to a national penetration of less than 20%. However, a slew of recent data now suggests that the global credit crunch is eroding US brand relationships in favour of own-label goods. According to market research group GfK, three out of 10 US shoppers are now 'buying more store-brand products' than they did a year ago, and 75% cite 'current economic conditions' as playing a big role in this decision. Nielsen says sales of own-label goods rose by 10% in 2008, a trend likely to increase this year.

Wal-Mart is also now better placed to offer a strong own-label line thanks to the recent successful revitalisation of its corporate brand. After years of exclusively communicating its low prices to consumers, the retailer has changed emphasis onto what those prices enable the US family to achieve. …

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