Why Walmart Just Decided to Get Rid of Two Huge Food Brands
Walmart announced this week that it is phasing out two food brands that had both been introduced to Walmart shoppers with much fanfare just a few years ago.
Wild Oats, an organic line brought to Walmart in 2014 and hyped as the mega-retailer's low-price solution for bringing organic foods to the masses, will disappear from store shelves in the coming months.
Walmart is simultaneously getting rid of another, markedly different food brand with the phasing out of Price First, an ultra-basic, low-cost in-house label featuring the plainest of plain blue packaging. While the Wild Oats move was noticed by media outlets like the Wall Street Journal, only industry publications like Supermarket News reported about the demise of the unloved generic Price First brand.
[UPDATE: Walmart asked us to clarify that Wild Oats is not a Walmart-created brand; rather Wild Oats is one of many independent labels sold in Walmart stores. Also, Walmart noted that while Price First is disappearing, the company has not released any information concerning the brand's sales or profitability. "We don't break out performance of individual items or private brands, so those claims about Price First aren't verified and can make the story inaccurate," a spokesperson said in a message.]
At first, the two labels seem to have little in common, other than the fact that they were introduced—and then dumped—by Walmart at about the same time. Yet both brands were brought to stores for largely the same reason: to help Walmart cope with a surge of competitors, at the high and low end of the market alike.
At the time Walmart was deciding to introduce these brands, Whole Foods was the grocery industry's darling; it had pioneered the healthy food supermarket model and inspired copycats to use its approach focused on organic foods and lots of fresh produce. Yet Whole Foods suffered from its "whole paycheck" reputation, and its high prices opened the door to competitors—including Walmart and its expanded organic foods selection.
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Meanwhile, Walmart was also being forced to compete with two German-owned sister grocery brands, Trader Joe's and its even lower-cost sibling, Aldi. Trader Joe's has been voted America's favorite supermarket for years in customer satisfaction surveys, while Aldi has been expanding at a phenomenal pace, from 1,200 U.S. locations in 2013 to an expected 2,000 by 2018.
Both Trader Joe's and Aldi have minimal selections of national brands. Instead, store shelves are mostly full of generic in-house labels, which can be sold for a fraction of the price of major brands. Walmart's Price First label appeared to be the retailer's answer to Aldi's low-price, no-name brands. As one marketing analyst put it at the time, Price First was "aimed at wooing bottom-dollar customers from Aldi and Dollar General." (Interestingly, Walmart also recently scaled back on the small "express" store format it rolled out as a response to the dollar store threat, basically declaring the concept an unprofitable flop.)
Apparently, though, the Price First and Wild Oats brands failed to resonate with shoppers enough for Walmart to keep them around. The death of Price First won't come as a surprise to early skeptics, who criticized the bare-bones aesthetics in the packaging.
“It’s just kind of depressing to look at,” Christopher Durham, a brands expert who reported on Price First on his blog, told the Washington Post at the time of its release. “I don’t believe you have to be insulting to consumers to sell a product.”
On the other hand, the failure of Wild Oats seems to be that Walmart shoppers didn't gravitate to the brand fast enough, and it has been difficult for the retailer to keep prices low and make profits. What's more, there seemed to be some redundancies what with another store brand, Great Value, which is known for low prices (overlap with Price First) and features some organic products (overlap with Wild Oats).
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So while Walmart is continuing to develop strategies to help it better compete with the Whole Foods and Aldis of the world, it is now "switching tactics," in the words of the Wall Street Journal. Rather than maintaining multiple brands that have failed to win over customers thus far, Walmart is trying to be more cost-effective while "hoping to add organic products to shelves in other ways, including selling more fresh produce and adding more organic food to its existing store brand, Great Value."