Why Walmart's Great Value Changes the Game

Retailer Revamps Store Brand to Make It Stand Out From Competitors

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BATAVIA, Ohio (AdAge.com) -- The recessions of the 1980s gave us black-and-white generics; this one has given us Great Value.

While Walmart's redesigned, repackaged and reformulated store megabrand has drawn some unflattering comparisons to those generic brands, to write it off as similar not only misses the point but underestimates its potential impact. The new Great Value is a game changer, not simply because of its size -- the brand is estimated to be larger than $10 billion -- but because its novel approach to store-brand packaging and merchandising. Great Value isn't trying to pass itself off as a clone of the brands it competes against; that bland whiteness aims to set the brand apart with a distinct look and identity.

Andrea Thomas, senior VP-private brands, Walmart
Andrea Thomas, senior VP-private brands, Walmart
"Walmart identified an opportunity to treat our private brands more like brands," said Andrea Thomas, senior VP-private brands for the chain, noting that Great Value ultimately has to earn its place on the shelf just like the others. She said the chain made "a conscious decision to hire people who have managed big brands and apply some of the basic brand-management techniques."

Ms. Thomas, who was VP-global chocolate for Hershey Foods and a veteran of Frito-Lay and Pizza Hut before coming to Walmart in 2007, said that means differentiating Great Value from other brands rather than trying to mimic them. "If you made a decision in one category [before], that equity or experience didn't transfer into any other category," she said. Great Value was "more than anything a collection of items," rather than a brand, she said.

The second objective was simply to upgrade the image, she said. "We needed it to look like we cared about the quality."

Publicis & Hal Riney, San Francisco, is handling advertising and marketing, but Ms. Thomas declined to disclose who was responsible for the design.

Taking the lead
Walmart, more often a creative follower of its retail competitors, has been a leader this time. A revamp of Target's entry-level store brand as Up & Up is hitting shelves a few months behind the new Great Value, and bears a remarkably similar plain-white resemblance.

Up & Up was developed largely simultaneously rather than as an imitation of Great Value, said a person familiar with the brand's development. But the goal was similar: to make the low-price brand stand out on the shelf from its premium competitors. In Target's case, the effort also meant trying to convey more of an emotional appeal than a strictly value-based one, while simultaneously removing the cherished bulls-eye logo from cut-rate merchandise.

The stark approach works for store brands with access to as much shelf space and merchandising support as they want, he said. Other marketers, which never know how much of either they'll get, have to cram as much visual impact and verbiage as possible onto their packages.

The risk of Great Value is to what extent Walmart will trade consumers down from the brands that have been its bread and butter for decades, which could depress same-store sales but possibly sweeten profits and margins. Ms. Thomas declined to say whether it had that effect last quarter, when Walmart's U.S. sales came in lighter but its earnings and margins were higher than expected.

The risk for Walmart suppliers is that, having taken on Great Value, Ms. Thomas will turn her attention elsewhere, such as the Equate health-and-beauty brand. "We are assessing the needs and opportunities for all the private brands," she said.

How the brand stacks up

If it were a stand-alone merchant, Great Value would rank as the nation's 39th-largest retailer, at an estimated $10 billion in annual sales. That's bigger than A&P, Whole Foods, Family Dollar Stores or Bed Bath & Beyond.

Great Value's estimated sales are ...

  • Equal to $86 from every household in the U.S.
  • Nearly twice the worldwide revenue of Clorox Co. ($5.5 billion) or Hershey Co. ($5.1 billion).
  • Bigger than the U.S. revenue of McDonald's Corp. ($8.1 billion) or Kellogg Co. ($7.9 billion).
  • More than the U.S. sales of Amazon (about $9.6 billion).
  • Close to the sales of Dollar General Corp. ($10.5 billion).
  • Approaching Procter & Gamble's fiscal '09 sales to Walmart Stores (about $11.9 billion, or 15% of P&G revenue).

Sources: Ad Age research, company reports, Stores magazine/Planet Retail

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