Courtesy of Walmart
Can Walmart Take on Trader Joe’s With bettergoods Launch?
Walmart is introducing a new premium private label, called bettergoods, that includes plant-based mozzarella, organic chocolate milk, chicken wings with brown sugar BBQ, and campfire roasted salsa that the discount giant describes as “approachable and — most importantly — affordable.”
Walmart’s largest private brand food launch in 20 years, bettergoods offers 300 items, including frozen, dairy, snacks, beverages, pasta, soups, coffee, and chocolate. Prices range from under $2 to under $15, with more than 70% costing less than $5.
bettergoods items will fall within three “distinct category pillars,” specifically:
- Culinary experiences: These items spotlight innovative recipes, elevated ingredients, and food-trend-forward offerings, including specialty salts and seasonings. Examples include Hot Honey Seasoning (under $3); a line of jar soups, including Creamy Corn Jalapeno Chowder (under $4); and premium Bronze Cut Pasta from Italy ($1.97).
- Plant-based: These products feature distinct green branding. Items include Oatmilk Non-Dairy Frozen Desserts ($3.44 a pint) and a cheese alternative with “an incredible cheesy pull when melted” (under $4).
- “Made Without”: This category offers a variety of options that cater to different dietary lifestyles, like gluten free, or made without artificial flavors, colorings, or added sugars. Offerings include Sweet Cream Dairy Creamer, made using four ingredients; gluten-free, antibiotic-free, all-white meat chicken nuggets; and Carnitas, Taco, or Tinga Seasonings (all under $2).
In line with Walmart’s “Every Day Low Prices” motto, bettergoods offers “quality, unique, chef-inspired food at an incredible value.” However, unlike many private brands that offer alternatives to national brand offerings at a lower price, many bettergoods items “are totally unique to Walmart, introducing customers to new and exciting flavors and concepts.”
“All of our research tells us that the customer expects these types of goods,” said Scott Morris, SVP of private brands, food, and consumables for Walmart U.S., on a media call. “They expect to have these elevated ingredients and offerings that we provide, and they are also looking for those healthier options.”
He added that bettergoods will be “very much being incremental” and won’t cannibalize Great Value, the chain’s largest private label that’s focused on generic products similar to national brand counterparts at lower prices.
The launch comes as private labels are taking share from national brands amid inflationary conditions. Circana reported private brands in the CPG category grew to 25.5% of unit sales in 2023 from 24.7% in 2022. Major competitors, including Kroger and Target, are also aggressively bolstering their private-label food offerings while Aldi, which offers largely private-label products, is expanding rapidly.
The New York Times suggested that bettergoods is aimed at helping Walmart “retain higher-income individuals” who’ve been trading down in the last few years amid inflationary spikes.
A Bloomberg article speculated that bettergoods represented a “bid for Gen Z dollars.” Morris told reporters, “As an industry, we’re seeing younger customers be more brand agnostic, prioritizing quality and value, and driving increased interest in private brands.”
Axios theorized that Walmart is “making a play for millennials,” citing data from Circana showing private label growth being driven “by consumers, particularly those with children, as well as millennial and Gen X households without children, who are strategically employing a variety of methods to stretch their dollars amid high inflation.”
A Wall Street Journal article described the launch as “a big strategic bet” to compete better against Costco, Trader Joe’s, and Whole Foods — all known for their distinctive private labels. The WSJ wrote, “It is likely to rankle food manufacturers already fighting for space on Walmart’s shelves. And it is part of Walmart’s efforts to keep bringing people to its stores even when they aren’t on the hunt for inexpensive necessities.”
Discussion Questions
What do you think inspired the launch of the bettergoods range?
What will be key to bettergoods gaining traction with Walmart shoppers?
Should national brand suppliers or any specific competitors be concerned?
Poll
Loading …BrainTrust
David Naumann
Marketing Strategy Lead - Retail, Travel & Distribution, Verizon
Zel Bianco
President, founder and CEO Interactive Edge
Private label power, retail bifurcation and consumers’ evolving needs inspired Walmart’s launch of bettergoods.
Consumers now see private labels as brands in their own right. Store brand sales smash records as consumers seek value for money from quality, innovative private labels.
Affordable, cross-category premiumization that reflects consumers’ needs (organic, free-from) will lead more Walmart shoppers to add bettergoods items to their carts.
P.S. Hope this line comes to Canada.
Looking at the growth rates for private label provides some understanding as to why Walmart has made this move.
2021 to 2026 forecast growth:
* Value private label tier: 35.2%
* Mid-market private label tier: 64.8%
* Premium private label tier: 76.2%
It’s basically playing where the growth is and where others, such as Target (with labels like Favorite Day) are seeing success.
And in its bid to retain and expand spending with the higher-income shoppers it won during the pandemic and the inflationary era, and its ongoing attempts to pull in younger shoppers, Walmart has to add more strings to its bow.
Neil, I beleive you are the guy to ask. In today’s data, are the “Trader Joe’s” label and Whole Foods “365” considered Private labels?
Yes, both are private labels. Most of what Trader Joe’s sells (c86%) is private label.
What inspired it, of course, was WalMart’s realization that the popular stereotype of its customer base as pork-rind crunching primitives was just that… a stereotype. There’s gold in that there oat-milk! That’s the hope anyway; I tried to skew positive by going with “somewhat likely” – as opposed to “somewhat unlikely” – but whether there are enough of this demographic (at WM) to make it worthwhile is anybody’s guess; will the tofu’ers risk getting laughed at or instead keep putting on disguises and patronizing “better” grocers? We’ll just have to see.
I think this is a great strategic move for Walmart but I agree with the Wall Street Journal that it feels more defensive and more about competing better against Costco and Target than about disrupting the market and attracting new customers (from the likes of Trader Joe’s).
Walmart is a behemoth but in previous RetailWire articles, many of us have commented about the regional allegiances of customers to brands like Trader Joe’s and Wegman’s. Trader Joe’s has managed well in the world of Costco and Walmart and I don’t think the introduction of Walmart’s private label will “eat” (pun intended) into Trader Joe’s business (or its fanatically loyal customer base). Plus all Trader Joe’s has to do is offer another tote!
However, I believe (or hope) Trader Joe’s knows not to rest on its laurels and that it must continue to deliver the products (physical and personal) that will keep all of its customers from trading their positive, relaxing, joyful Trader Joe experiences for the stressful, crowded, inattentive experiences at Walmart – and that’s just in the parking lot!
They are a little late to the game but better late than never. It makes sense to add this line. I hope they are judicious about what they decide to be bettergoods products. I don’t see any non-food products (no pfa’s, no dyes, sustainable, etc) but maybe that will be a second phase.
Walmart and Trader Joe’s do not compete head on in the same arena, and “better goods” will not change that whatsoever.
I’m a lifetime partner and fan of the Walmart business model and I know how well it works. Walmart doesn’t need to be compared with Trader Joe’s, and it won’t be.
The “better goods” assortment, if successful, will drive incremental and trade-up dollars with Walmart’s own consumer base.
Walmart has a good batting average with achieving success so I wouldn’t bet against them, but unless the quality is noticeably superior to national brands and their own private label, results will be limited.
Meanwhile, Trader Joe’s need not worry about losing customers to Walmart. Trader Joes enjoys its own unique culture, quality image, and targeted shopping experience, and none of those assets are in jeopardy Db.
“Everything old is new again.” I remember that in the early 1970s and 1980s, the big private label topic was the introduction of generics at the low end and a high-end private label, first introduced by Loblaws’ “President’s Choice.” With some hesitancy in my recollection, I beleive Walmart introduced bifurcated PL. I don’t know how the story ended.
To me, the best PL is the one that equals the branded offers at a lower price. Sometimes, one finds that with the regular PL offering. Bettergoods should be sure to live up to the expectations of their name. “Bettergoods” strikes me as not just better than PL but also better than the branded offerings. Customers will try the products. The future is in meeting the expectations of the customer.
In the past, Walmart attempted to upsell and attract more affluent customers, specifically Target and Kroger. The success of these strategies has been relatively modest. I am much more optimistic about this effort because of the success of Walmart+. The main deterrent for many upscale customers to shop at Walmart has been the store experience. While they have made great strides in that area, there is some hesitancy for these customers to fight the crowds. They’re willing to spend a bit more to park closer, navigate a smaller store and avoid long lines at checkout. Walmart+ has provided access to Walmart assortments without having to go to the store, and I believe that will be a big difference for this range.
Who should be worried? In my opinion, Trader Joe’s is fine. Their customers are incredibly loyal and not likely to switch to Walmart. Target and Kroger, however, I expect they will see some impact from this strategy.
There is no debating the growth in sales and the profit margins for private label products. Continuing to add new product areas for private labels is a smart strategy for Walmart. The expanded product offering will provide customers options for products they may have purchased from Walmart’s competitors. However, the bettergoods product offering won’t likely steal market share from Trader Joe’s as their customer is very loyal and it is difficult to replicate the shopping environment.
I’m not so sure about the Trader Joe’s comparison. Bettergoods is giving (Target) Good & Gather if you ask me. I’m wondering if the launch has anything to do with the shrinking national brand presence I’ve noticed in plant-based products at Walmart lately. Walmart’s plant-based offerings are already hitting the right note (with cheese being the Holy Grail), even though the assortment is spotty. Regardless, it’s about time Walmart created a “better” private brand in grocery rather than stuffing everything under its power brand, Great Value. Hopefully, Walmart will pay close attention to creating a well-rounded product offering rather than focusing too much on uniqueness (chasing Trader Joe’s).
Kudo’s to Walmart for introducing the bettergoods private label brand. Consumers are looking for value given the persistent headwinds of inflation. Importantly, the category examples listed in this article sound very appealing, very yummy, and if they are close in quality, taste and price to many of the take-away, ready to eat food solutions from Trader Joe’s, Walmart will see significant revenue streams from bettergoods.
The new program at Walmart sounds like it’s aimed squarely at Target, which has always positioned its private brands as “better than the competition.” This is more true than ever in Target’s grocery aisle, even as both Target and Walmart compete against TJ’s, national grocery private brand, and so forth.
“bettergoods” makes a strong brand promise, and Walmart would be smart to ensure consistent product quality and differentiation from its other labels…not just a lower price.
This could be a winner especially for consumers that live in food deserts or areas where local and fresh products are a challenge to find. If the items in these categories are truly “better goods” than this is a win-win for the consumer and for Walmart.
I like the fact that Walmart is saying out loud “that bettergoods will be “very much being incremental” and won’t cannibalize Great Value.” That’s strategic assortment planning to increase basket size, not encouraging the customer to switch from one sku to another. If Great Value is all about core basics ad bettergoods is about more distinctive novelty products, that’s layering to increase basket size. It’s giving existing customers more reasons to buy a broader range of products, and it’s giving Walmart the opportunity to attract another tier of shopper who is looking to buy more distinctive, premium product at Walmart’s level of value. That’s very smart stuff.
Anytime Walmart tries to be Target it usually doesn’t go well. Same for when Target tries to be Walmart. Each has been very successful staying in their discount lanes and knowing who they and their customers are. Not saying Walmart can’t trade up a bit but it must be very careful in doing so. Let’s see where this program is a year from now.
Creative ideas by Walmart. Yet if they plan on drawing business away from Costco or Trader Joe’s, they’ll need to go beyond communicating brand fun to increase meaningful sales.
To compete with Costco, they need to think or retool for higher quality ingredients at a great value.
To compete with Trader Joes, its much more than packaging and flavors. The entire retail experience make the brand appealing, from the small store with kitschy decor, and Hawaiian shirts. Wal-Mart may not gain many new customers here, rather, an increase in sales from existing customers.
Our research shows that supermarket shoppers believe the quality and pricing of private labels is strong relative to national brands. So a strong private label strategy is a necessity and incorporating new product lines a must. This launch makes sense.