Walmart’s ‘bettergoods’ is a nod to shifting tastes, shrinking wallets

May 7, 2024

By Phil Lempert, SupermarketGuru, Consumer Trend Tracker, Food Trends Editor, NBC’s Today, and Author

Walmart’s largest food private brand launch is 20 years is focused on higher quality, what they deem “trend forward” and chef-inspired foods with most products priced under $5.

In a press release, Scott Morris, senior vice president of private brands, food, and consumables at Walmart, said: “bettergoods is more than just a new private brand. It’s a commitment to our customers that they can enjoy unique culinary flavors at the incredible value Walmart delivers.” The company says that bettergoods is the largest food launch in 20 years and the fastest brand they have brought to market.

What’s interesting about this product line is that these 300 items are not the typical Walmart assortment of foods, and obviously designed to both expand the contents of the Walmart traditional shopping basket assortment, appeal to younger more food-trend focused consumers, which hopefully attract these atypical non-Walmart shoppers to the store. With the rise in food prices coupled with shrinkflation, more shoppers, of all ages, are willing to shop around to get the most value and lowest prices, which is why Walmart’s store brand evolution makes good sense. Retailers like Trader Joe’s and Aldi have built their unique brand identities around a robust private label strategy, for decades, offering exclusive products that cannot be found elsewhere. Their brands are not just alternatives but are preferred for their innovative flavors, health-conscious formulations, and eco-friendly packaging, which appeal to specific consumer segments – which is what Walmart is saying they want to emulate.

These new products fall under the umbrella (or as Walmart calls them ‘pillars”) of three food trends: Made Without, Plant-Based and Culinary Experiences and according to the company most of which are unique to Walmart, and all are more affordable offerings. The items are priced from under $2 to $15 with most products under $5 and span across the frozen, dairy, snack, beverage, pasta, soup, coffee, chocolate aisles.

Made Without is based on dietary lifestyles including gluten-free or made without artificial colors, flavors or added sugars; a move that most supermarket private brands made years ago. The product examples that Walmart offers up is their Sweet Cream dairy creamer that is made with only four ingredients, and their all-white meat chicken nuggets, which are antibiotic-free (it’s important to note that as required by federal law, all meat, poultry and dairy foods sold in the U.S. must be free of antibiotic residues). As a side note, it’s interesting to me that on the same day they announced the bettergoods brand, they also shuttered their 51 Walmart Health clinics and Walmart Health Virtual Care program.

Plant-Based is the second pillar which includes oat milk non-dairy frozen desserts and a plant-based cheese. The U.S. retail market for plant-based foods is worth $8.1 billion and in 2023 6-of-10 U.S. households purchased plant-based foods, according to SPINS data. What’s interesting is that, while clearly plant-based has been a significant trend for the past half-dozen years, plant-based food unit sales fell across most categories last year. For example, plant-based milk dollar sales increased one percent while unit volume decreased eight percent. Plant-based meat and seafood dollar sales declined 12 percent and units declined 19 percent according to The Good Food Institute. One of the challenges for the plant-based category has been the reticence of the shopper to pay the high price of goods, Walmart’s offerings may well solve that problem with the price of their plant-based cheese alternative at $4.

Culinary Experiences, their third pillar, spotlights innovative recipes, elevated ingredients, and food-trend forward foods and includes Hot Honey Seasoning, Creamy Corn Jalapeno Chowder and a premium-imported Italy Bronze Cut Pasta. Statista’s research expert, Nils-Gerrit Wunsch, reports that the number one food activity of Millennials and Generation Z in North America is watching online food or recipe videos. This was revealed by a widespread 2022 survey among 13–39-year-olds in the U.S. and Canada. These generations’ other popular activities include watching food TV shows, and cooking meals that influencers cook. Can Walmart’s new initiative be enough to attract these shoppers? In their February 2024 report, McKinsey says that groceries are the hottest new splurge category for Gen Z and millennials who spend more on groceries than any other category.

All of these offerings might not seem very special to say, someone who shops at Wegmans, but to the the traditional Walmart shopper it might just be enough to expand their healthy and culinary aspirations. Numerator found that Walmart’s typical U.S. shopper is a white woman between 60 and 78  years old who is married, lives in the suburbs, owns their home and has an income of between $40,000 to $80,000 a year, but since the pandemic, the retailer has reported strong gains among households earning more than $100,000 a year.

Walmart says that the bettergoods products are “thoughtfully curated by Walmart’s experienced product development team that collaborated with suppliers across the globe to source quality, trend-forward ingredients and flavors.”  They are also stressing that for consumers “tasting is believing” which is why for bettergoods to succeed Walmart must support the launch with extensive sampling and telling the stories of these products in-store, on their website and through social media. If they truly want to attract a younger, hipper food-involved audience, the key will be to reach them through the media that they respond and relate to.

The competitive landscape of grocery retail and store brands have transformed from generic, low-cost alternatives to prominent players on all grocery shelves especially since the pandemic, although decades before A&P’s Masters Choice and Loblaw’s President’s Choice paved the way for today’s incarnations.

Walmart’s evolution is not just a tale of changing consumer perceptions but a strategic shift that we all should watch carefully and study. For brand managers and category managers, the rise of private label brands in general holds several strategic implications. It underscores the importance of understanding consumer trends and preferences. The ability to anticipate and react to shifts in consumer behavior with agility is crucial. Private labels thrive because they are quick to adapt to changing consumer demands, often faster than national brands due to shorter decision chains and integrated supply chains – and Walmart has gone out of their way to point that out in their announcement of the launch of bettergoods.

Walmart is positioning this private label around unique offerings that distinguish them from other grocery retailers – like ALDI, Lidl and Trader Joe’s have most effectively done flowed closely by Safeway’s O organics and other store brands.

The biggest challenge Walmart faces is brand-building. Even though bettergoods are store brands, they require strong branding strategies as much as do national brands. For success, Walmart must build a brand that resonates with consumers and stands for something beyond just price competitiveness, which it appears they are trying to do. The key is execution; let’s see what bettergoods does to earn the consumers’ trust and dollars.