Business

Wal-Mart plans to make store brand bigger draw

PORTLAND, Ore. — Wal-Mart is stepping up the competition to draw cost-conscious shoppers, promising that store-brand products from cereal to cookies will be tastier, smell better and look more attractive.

The world's largest retailer outlined plans Monday to reformulate hundreds of items in the Great Value store brand that it says is the country's biggest food brand by both sales and volume.

Wal-Mart, responding to the increasing popularity of store-brand products among cash-strapped consumers, is also introducing nearly 100 new products as it tries to better compete with national brands.

"We don't feel we are messing with success, we are enhancing our success," said Andrea Thomas, Wal-Mart Stores Inc.'s senior vice president of private brands.

The company is also introducing a consistent design across the line to help shoppers better identify its products and has added new elements, including labels in both English and Spanish. It declined to disclose sales figures for the Great Value line.

Wal-Mart's move underscores the importance of lower-priced store brand products, and it ups the ante in the already competitive grocery industry.

The Private Label Manufacturers Association said a basket of 40 average store-brand products runs about 30 percent to 35 percent less than a basket of comparable national brands.

Kroger said 27 percent of its sales in its most recent quarter came from its own brands and fueled most of the company's overall grocery volume growth for the year — a trend it expects to continue.

Experts say the most popular items for store brand sales are the most basic and often-used goods, including eggs, milk and paper products. But the latest growth seems to be in unique products, such as a specialty coffee, that consumers might be more willing to try after they've made the leap to a corporate brand with something more staid, such as toilet paper.

Experts say that in order to be competitive, companies need to focus on adding some value to their offerings.

"Innovation and driving the quality gap is everything," said Matt Arnold, a consumer analyst at Edward Jones.

Target's Archer Farms is a good example of that, he said, with unique products, such as fortified water or butter toffee popcorn in sleek packaging, that move beyond necessities to discretionary items, but are priced much lower than a comparable national brand.

Wal-Mart's newest products reflect that trend. The company said it tested more than 5,000 of its products against national brands to nail down exactly what consumers want.

The company's new products move far beyond the basic paper towel or milk offerings, with items such as organic cage-free eggs. Wal-Mart's Thomas also said the company is going to sell flavors of some products that national brands might have discontinued but remain popular with its shoppers.

"That is where the challenge to other retailers will be," said Brian Sharoff, president of the Private Label Manufacturers Association. "They don't have to limit themselves to one category. They can go into any category in the store and piggy back on their success."

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