Private party at Wal-Mart

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The industry portrait emerging since Wal-Mart Stores stopped providing scanner data to market-research firms shows just how much power the giant retailer wields. The data show this year's sales surge in private-label home and personal-care categories has been confined mainly to Wal-Mart.

A report issued this month by Banc of America Securities analyst William Steele found that overall private-label sales growth for the four weeks ended Sept. 9-without Wal-Mart data included-shows few of the private-label market share gains reflected earlier this year. The data do not reflect the impact of the events of Sept. 11.

Information Resources Inc. figures show private-label sales up only 2% in September in the 35 categories Mr. Steele tracks, but he estimates private-label growth would have been five to eight percentage points higher were the Wal-Mart data still included, based on earlier patterns. Based on the new data, he estimates Wal-Mart single-handedly accounted for three-quarters of the private-label growth seen in non-food categories in 2001.

Wal-Mart did not return calls for comment at press time. The relatively narrow base of private-label strength, albeit at the world's biggest retailer, might seem a relief for marketers. But Mr. Steele expects the data may encourage other retailers to mimic Wal-Mart's more aggressive private-label programs using their own house brands, as Wal-Mart has done with White Cloud.

"I think in the future we're going to be talking about controlled brands, as opposed to private-label," Mr. Steele said. "These are brands ... that Wal-Mart and others are backing aggressively with marketing support."

Wal-Mart is fast becoming a bigger factor for its suppliers. The chain's share of Procter & Gamble Co.'s sales, for example, has grown from 11% in 1998 to 15% in 2001.

Nowhere is the impact of Wal-Mart's house brands more obvious than in diapers. Deutsche Bank Alex. Brown analysts Andrew Shore said in a recent report the chain's overall private-label program has overtaken P&G's Pampers and Luvs brand combined. Kimberly-Clark Corp.'s Huggies is the leading brand in the chain.

A P&G spokeswoman said the company's own household panel data from VNU's ACNielsen Corp. shows Pampers continues to lead White Cloud within Wal-Mart, and that P&G's total Wal-Mart diaper business still leads private label at Wal-Mart.

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