Walmart has had an especially busy few weeks stepping up its grocery game. Early this week, The Street and other news outlets reported that Walmart is getting ready to launch meal kits as early as this December. Now, the New York Post has reported that the big box retailer’s e-commerce site Jet.com plans to unveil in the coming months its first private brand consisting of more than 60 food and household items.
Amazon may have Whole Foods Market, but Walmart has Jet.com — a brand that is especially popular among coveted millennial shoppers. What Walmart doesn’t have may also help it remain competitive as Amazon continues its disruption of the grocery space. Shopping at Walmart or at its acquired e-commerce sites doesn’t come with any, let alone multiple, annual fees. That zero membership fee coupled with the retailer’s low prices can serve as a key differentiator in grocery and help Walmart stand out from its competition. Of course, Walmart has also been making various chess-like moves to keep from becoming another casualty of the online behemoth, and private brands are just part of the equation.
Meal kits represent an excellent opportunity for grocers to set themselves apart from their competitors. The meal kits can serve as vehicles for retailers to promote their private brands, while also delivering to customers convenience and, depending on the meal, healthy or even organic food choices. With places like Albertson’s, Kroger, SuperValu, 7-Eleven — and, of course, Amazon and Whole Foods — trying their hand at them, it’s no surprise that Walmart is getting ready to test the waters. According to The Street, “Walmart is hoping to offer an array of meal kits from different companies on its website, according to Michael McDevitt, the CEO of Terra's Kitchen, a meal kit company based in Baltimore, Md. ‘This is a low-risk model for Walmart to see if their e-commerce shoppers will have an interest in meal kits, and if so, which ones are the most interesting to them. There's no infrastructure risk, no marketing risk.’” McDevitt told The Street that Walmart will serve as “a portal for different meal kit companies to sell their products as a third-party host. The meal kit companies will then pay the retailer a referral fee for driving customers to them.”
Walmart’s acquisition of Jet.com may have seemed like an odd match at first glance but it was a very smart move. By keeping the e-commerce site operating under its own banner, Walmart gets to tap into the younger, millennial market. The big box retailer has also leveraged its Jet.com acquisition to bolster its technology. In August, for example, Walmart partnered with Google for voice shopping — a response, no doubt, to Amazon’s voice-powered Alexa.
Earlier in the year, Walmart launched Easy Reorder, a feature in its mobile app that helps customers easily access a list of items they purchase most frequently. It also launched free two-day shipping, like Amazon’s Prime but, Walmart cheekily points out, without a membership fee.
In the year since the Jet.com acquisition, there’s been an obvious learning curve. The New York Post reported that “earlier this year, Walmart began selling its private label brands, Great Value, Equate and Sam’s Choice on Jet.com. But industry experts said the brands are not popular with Jet.com’s younger customers.” Launching a private brand tailored to Jet.com and its shoppers, therefore, is a logical first step. “The Jet.com private label products will launch exclusively on Jet.com for the first year and will later sell on Walmart.com — the two websites are separate right now — and may eventually be sold in Walmart stores,” a source familiar with the plan told the New York Post. “A big focus will be on breakfast cereals, which have risen in price more quickly than most grocery items, say experts,” the Post added.
The next move is for Walmart to look at its current portfolio of private brands, particularly Great Value and Equate, and decide whether it’s time for a reboot. “Walmart is where consumers go to buy branded products for less, but everyone is getting into private label now and Walmart has to elevate its offerings,” Steve Johnson, of Foodservice Solutions, told The Post. Of course, revamping its existing private brands doesn’t necessarily mean they will take off on Jet.com, but it may be wise to do so even if Great Value and Equate end up being sold exclusively at Walmart stores and Walmart.com.
A refresh may well be in the cards. The company unveiled a redesigned Sam’s Choice in late 2013 and, just recently, rebooted its Parent’s Choice brand. Walmart also understands that the way to reach younger shoppers is to offer value beyond price. The company this week announced plans to strengthen its sustainable chemistry policy for consumable products, reaffirming the company’s work to increase transparency, advance improved product formulations and offer a larger sustainable product selection for customers.
As part of the policy expansion, Walmart aims to reduce its consumables chemical footprint for Walmart and Sam’s Clubs U.S. stores by 10% by 2022, becoming the first U.S. retailer to set a time bound reduction goal. Consumables products include items such as household cleaners, cosmetics and skin care items and infant products. The goal applies to chemicals defined by the Walmart Priority Chemicals List in its revised commitment.
“We know our customers are interested in what goes into products and how they are made. It’s important for them, and we are advocating for them by encouraging innovation and transparency into that process,” said Zach Freeze, senior director of strategic initiatives for sustainability at Walmart. “Our strengthened commitment provides more clarity on our expectations for suppliers in working towards enhanced product formulations and setting concrete benchmarks to check progress along the way.”
Last month, Walmart participated in the Chemical Footprint Project survey. It also publicly reports its progress annually through the Global Responsibility Report and Sustainability Hub. To date, the retailer’s suppliers have reportedly removed 96% of high priority chemicals by volume weight from the consumables products sold in Walmart U.S. stores, up from 95% last year.
“Walmart has set an industry precedent for targeting and measuring reductions of chemicals of concern in its products,” said Boma Brown-West, senior manager at the Environmental Defense Fund. “Walmart demonstrates the Five Pillars of Leadership on safer chemicals and encourages the pursuit of safer products across the supply chain.”
The company promotes transparency with clear ingredient labeling and reformulates products customers use in their everyday lives without increasing their price. Moves such as these resonate with younger shoppers who value transparency as much, if not more than, price and want to know how the products they use are sourced. These efforts can also be leveraged to elevate Walmart’s private brands and drive home the message that they are as good as, if not better, than their national brand counterparts.