Walmart commits to store brand development

BENTONVILLE, Ark. — Long known for its commitment to brands, Walmart is in the process of investing in its store brand offerings in light of competition from value operators like Lidl and Aldi, both of which trade heavily in private label offerings, Doug McMillon, president and CEO, Wal-Mart Stores, shared with investors attending the Bank of America Merrill Lynch 2017 Consumer & Retail Technology Conference on Tuesday.

"We [have] some pretty big opportunities with private brand and with sourcing," McMillon said. "We’ve resourced private brand; we have more talent there than we’ve ever had before," he said, noting that the management team behind private brand is emphasizing quality.

"We have to get out of this binary, are you private brand all-in or not. [W]e can do both at the same time. And that’s what we are doing.”

"On the floor of our store managers meeting last week in Orlando, the first time I can remember there were lab coats, some scientists and suppliers and some of our own merchants that were showing how we have built some of these private brand products," McMillon said. "We wanted our store managers to see quality. We had examples from food [and] we had examples from footwear and apparel, so that our own team would know we’re really investing and ensuring that our specifications here are strong," he said.

"We started to see some momentum in private brand and we’ll sell brands for less, but for the space we allocate to private brands it's got to be great," McMillon added. "We have some really big private brands and some that have a great reputation."

For Walmart and Sam's Club, private label delivers more than another value proposition to the consumer, it delivers loyalty, McMillion explained. "If you can get Tide anywhere, but you can’t get Sam’s Club Members Mark or Equate or Great Value anywhere," McMillon said, "then there’s a loyalty there that passes, not just through the store, but through into the e-commerce business as well."

And that loyalty becomes more important moving forward, McMillon said. "That doesn’t mean that we want you walk into a Walmart store and if we got an 8-foot section of something, we don’t want you to see 4-foot of private [label]," he said. "We have to get out of this binary, are you private brand all-in or not," McMillon added. "Can we be great at selling brands for less and resource private brands so that when we do sell a private brand, it’s great? Yes, we can do both at the same time," McMillion concluded. "And that’s what we are doing."


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