Walmart Talks Private Brand at Investors Meeting

screen-shot-2016-10-16-at-5-11-53-pmAt its 2016 Investment Community Meeting, October 6th, Walmart outlined the retailer’s strategic framework to grow by serving customers across all channels and creating a seamless shopping experience. The company also shared select guidance information along with its capital expenditure estimates for the next fiscal year.

Walmart President and CEO Doug McMillon outlined four key areas of focus to drive continued success:

  • Make every day easier for busy families;
  • Operate with discipline, including a continued focus on expense management;
  • Be the most trusted retailer; and
  • Deliver results and position the company to win.

McMillon noted ongoing success will be driven by a number of factors. These include continued momentum in the U.S. business; solid growth in key international markets, including Mexico and Canada; a sharpened focus in China; and e-commerce investments.

“We are encouraged by the progress we’re seeing across our business and we’re moving with speed to position the company to win the future of retail. Our customers want us to run great stores, provide a great e-commerce experience and find ways to save them money and time seamlessly – so that’s what we’re doing,” McMillon said.

And of course private brand was included in the conversation:

screen-shot-2016-10-16-at-5-19-59-pmDavid Cheesewright, President and CEO, Walmart International discussed global harmonization and potential rationalization.

“Private brand, you’ll hear it’s a consistent theme across the corporation. We’re seeing really good growth in private brand. Outside of — obviously, the U.K. is a huge private-label player, and we range with penetrations there of just over 40, and there are some markets we’re in low single digits, so big opportunity for us in private label. Outside the U.K., we’re seeing growth of around 15% across our private brands, and we really think we’re just getting started.

Probably the most exciting thing on private brand is collaboration. And about a year ago, Greg, we agreed that we would use 1 single system for spec-ing and private-label development across every market around the globe. Now as that rolls out, you can imagine the opportunities that presents us. We’ll be at a — see a seamless view of specifications, innovation, sales rates. And the opportunity, particularly across North America, to start looking at consolidating sourcing, developing strategic sourcing partners and also harmonizing a lot of the products is a really big opportunity for us in private brand.”

He went on later in the event to say…

“…we’re really working on foundations. We’re about halfway through a program of looking category by category at what we need to change to start to build for the future for [where] customers want. And a lot of that is about rationalizing assortment, making it easier for customers to see what they want, simplifying the operations. That’s about halfway through. We’re also about halfway through a relaunch of our private-label program. And with that, that’s 40% of sales, that’s a big deal for us.”

Greg Foran, President and CEO, Walmart U.S. went on to say…

“I’m also pleased with the momentum in our private-brand business, and Dave, you and your team have been really instrumental in helping us get up to speed quickly here. I think private brands are so important. We should really pride ourselves on it. At the end of the day, we’ve got our name on it. We get a lot of questions about how we’re going to compete with our discounters.

Well, I can tell you that private brands are a really key part of addressing price gaps. I can also tell you that private-brand customers are some of our most loyal and engaged shoppers. Of course, in the U.S. here, we remain committed to being a house of brands. As an EDLP retailer, national brands are the thing that allow you to highlight price gaps to competitors. And our data shows that of the increased spend we see from private-brand adopters, half of it actually is on main brands.”

Walmart CFO Brett Biggs outlined the company’s financial framework to deliver strong, efficient growth, operate with discipline and allocate capital strategically to drive long-term shareholder value. The company will rely more on comp sales and e-commerce growth to drive the top line and plans to slow new-store openings, while increasing investments in e-commerce, technology, store remodels and other customer initiatives.

Biggs added, “I’m pleased with the momentum in our business. We have the financial strength to strategically invest in growth, while returning significant cash to shareholders in the form of dividends and share repurchases.”

Watch the entire event.

 

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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.