Walmart Eyes Bigger Mission in Private Brand Growth

Private Brand has become a mission-driven strategy for the world’s largest retailer.

In a passionate keynote presentation, Jack Pestello, senior vice president, Walmart Private Brands and Manufacturing, said the retailer’s ambitions are no less than to drive sustainability, trust, and innovation, and to change the industry.

“We use Private Brand to lead the way on sustainability,” he said at Velocity: the My Private Brand Conference, held recently in Charlotte, N.C.

Pestello pointed to the retailer’s stances on palm oil and post­consumer plastics and cited an emphasis on end­to­end supply chain.

“We focus on good brands that deliver trust with customers. We want to be good for customers and for the world.”

Boosting Quality Drives Loyalty

Pestello said the Walmart Private Brand portfolio, which includes brands such as Great Value and Sam’s Choice, is “the world’s biggest and fastest-growing.” It is growing 2.5 times faster than the company’s closest competitor, according to a data point he relayed.

“In the last month, 70% of Americans have shopped at a Walmart, and 90% of those have put private brands in their cart,” he said. “It is an unbelievable household penetration.”

However, when Walmart started its journey to reinvent Private Brands four years ago, it realized the effort needed to reach beyond just price.

Price is very important to Walmart, but “the days of sitting around and haggling over 5¢ are gone,” he said. “We have to think about efficiency, ask farmers how they grow, and then help remove costs from the system.”

He continued, “Price matters, and we have invested in price. But customers buy one time on price, and after that they come back for the quality.”

The retailer brought in new team members and gave them a mandate to improve private brand quality. Much of the work was energized by the company’s mission-driven focus.

“We have purpose, it’s about changing peoples’ lives, and saving people money so they can live better,” he said.

Focus on Clean Label, Transparency

A key driver has been the importance of social responsibility, including through clean label products.

“It’s a professional and personal passion,” he said. “It’s beyond clean label, it’s about sustainability, and how do we make a better product and think differently. Is it sustainably grown and harvested? Do we pay people to work at a fair wage?”

Transparency is a central part of the effort, because, “If we’re not transparent, the end of the story is told by our customers,” he said. “We want to tell the customers where the tuna was caught, and how it was processed, and in what country. And where it was canned. And we want to do that across thousands of products. We want to tell the whole story, and drive better products at lower cost.”

Pestello positioned the strategy as connecting with the big picture of supply chain, engaging with farmers and other stakeholders, and considering how to feed the world of the future. “We’re thinking about the entire supply chain, back to how are we feeding our calves, visiting farmers to see what they are feeding cattle, and thinking about the-end to-end supply chain. We’re in this for the long haul.”

Walmart is driven by other important factors in its Private Brand development. These include collaboration with suppliers for innovation, fostering an omnichannel environment for customers, and maintaining a strong fresh perception because that “gives you credibility across the store.”

The company’s ubiquitous presence across America makes Walmart’s case unique, because its shoppers have such a wide variety of needs, given that Walmart’s. customers mirror America’s customers. Pestello indicated this requires deep research that goes beyond merely crunching numbers.

These efforts include examining customer home pantries and shopping along with consumers in stores. The retailer aims to never forget that its journey has moved from private label to Private Brands, with an emphasis on “customer-led brands” that “aren’t just me-too.”