Walmart 2000 Annual Report Download - page 16

Private Brands Fill Value Gap With Quality Merchandise
Private Brands Fill Value Gap With Quality Merchandise
It all began with the Ol’ RoyTM
brand, the private-
label dog food named
for Sam Walton’s favorite
hunting companion.
Introduced to Wal-Mart
stores in 1982 as a low-
price alternative to the
national brands,
Ol’ Roy steadily grew to
become, pound for
pound, the biggest seller
of all dog-food brands in
the country.
Today, thousands of other
private-label Wal-Mart products
are trotting along in Ol’ Roy’s
tracks, offering value to
cost-conscious con-
sumers around the world.
Wal-Mart’s own line of
garden fertilizer, for exam-
ple, has become the best-selling
brand in the country.
“We are a brand-oriented company
first,” says Bob Connolly, Executive
Vice President of merchandising of
Wal-Mart Stores, Inc. “We became
the largest retailer in the world by
offering quality, well-known brands
at everyday low prices. But we also
use private labels to fill a value or
pricing void that, for whatever rea-
son, the brands have left behind.
The market has really dictated
every move we’ve made in private-
label brands. We don’t create them
to improve our profit margins; we
create them to improve value to cus-
tomers, which builds customer loyalty.”
In the end, this loyalty improves
Wal-Mart’s sales and profit margins,
which also helps investors.
“We want our prices to be accessible
to everyone — not just a select
group,” says Connolly. “So part of
our strategy with the private-label
brands is to offer opening price
points — the lowest price available
in the store for a particular type of
item. The national brands will some-
times abandon a traditional opening
price to emphasize higher-end prod-
ucts with better profit margins.”
Often, Wal-Mart uses its Great
Value®brand to offer those impor-
tant opening prices. An
innovative brand, Great
Value was the first line to
introduce a fat- and sugar-
free coffee creamer, and
has also led the way in devel-
oping convenient and user-
friendly packaging, like the
easy-grip bottles used for
Great Value juice drinks. More
than 800 Great Value products
are now offered in the deli,
dairy, dry grocery, meat and
produce departments.
Wal-Mart has applied a similar
concept to the pharmacy and
health-and-beauty-aids depart-
ments with the high-quality
Equate®product line. Several
Equate items have become top
sellers in their categories, including
Equate Ibuprofen and Equate
Pain Reliever.
Focus-group studies reveal that cus-
tomers actually think of Equate as a
national brand. The products are so
popular, in fact, that suppliers get
letters from customers asking why
they can’t buy Equate products at
other retail chains.
Spring Valley®, Wal-Mart’s private-
label vitamin line, is another top-
seller in the over-the-counter
pharmacy area, already becoming
the largest brand of vitamins sold
in the United States. Recently, the
product line was recognized in a
nationally known consumer maga-
zine for its quality and value.
OL’ ROY’S NEW TRICKS
OL’ ROY’S NEW TRICKS
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