Private label items give Walmart pricing edge in new study

Walmart’s private label grocery and consumable products continues to offer substantial savings for consumers watching every dime they spend, according to a recent pricing survey completed by Raymond James & Associates.

A consumer who purchased a basket of 55 grocery and consumable products in December at a typical Walmart Supercenter or Neighborhood Grocery Store would have saved $45 on the $160 purchase by choosing private label products or rollback items over branded everyday low priced products, according the study.

Officials with Walmart U.S. have worked over the past year to introduce lower price points through expanded private label and smaller package sizes to better compete with Aldi and Dollar General who continually outperform Walmart on grocery basket challenges that look at opening price points.

Walmart U.S. CEO Greg Foran said in October that he expects to introduce more private label products where there are opportunities for growth. He said Walmart’s private label ventures must provide like quality with price savings for consumers because the retailer’s reputation depends on it.

“If ever the quality of our store brands are questioned, I need to hear about it,” Foran said.

The brands compared in the Raymond James survey to Wal-Mart’s Great Value and Equate alternatives include: Kraft, General Mills, Barilla, Maxwell House Coca-Cola, Bud Light, Tyson Foods, Nestle, Nabisco, Planters, Oscar Meyer, Ragu, Peter Pan, Welch’s, Heinz, Campbell’s, Bounty, Charmin, Listerine and Tide.

For just the edible grocery category the savings between private label and branded baskets totaled $29.24 or 17.8%.

Store brands account for about one of every four products in a supermarket – and they're branching into niches that lack national-brand competition such as balsamic vinegar or chocolate-covered raisins. 

Grocery analysts say their popularity is understandable, considering that they typically cost 15% to 30% less than name-brand counterparts.

Consumer Reports tested a wide array of private label products agains their branded counterparts last year and found many were more than 30% cheaper with similar quality concluding the name-brand premium is largely the result of advertising and promotional costs that are passed on to consumers. The Consumer Report study concluded Wal-Mart, Sam’s Club, Costco and Target were each winners in every category. Most of the Sam's Club products were 50% or even 60% cheaper than the name brands, but required consumers to buy warehouse-size packages.

The private label savings reported by Raymond James were a widest in dairy, meats and snack items, all of which were found to have comparable quality. Some of the biggest savings are identified below:
Items (first cost is branded item, second is private label cost, third figure is savings)
• Gallon of milk: $5.98, $4.35, 27%
• Kraft singles cheese: $3.28, $2.88, 12.2%
• Eggland’s Best Eggs: $2.78, $1.98, 28.8%
• Wonder Bread White: $1.98, $1.28, 35.4%
• Barilla Thin Spaghetti: $1.28, $1, 21.9%
• Kraft Mac n’ Cheese: $0.98, $0.50, 40.8%
• Lipton Tea Bags: $3.48, $1.98, 43.1%
• Coca-Cola Classic: $4.48, $2.69, 40.2%
• Nabisco Oreos: $2.98, $1.98, 33.6%
• Planters Peanuts: $3.50, $2.48, 29.1%
• Perdue Chicken Breast: $4.48, $1.99, 55.6%
• Heinz Ketchup: $2.98, $1.68, 43.6%
• French’s Brown Mustard: $1.97, $1, 49.2%
• Morton Iodized Salt: $0.8, $0.50, 39%
• Advil Tablets: $7.97, $2.48, 68.9%
• Listerine Mouth Wash: $5.97, $2.98, 50.1%

Some of the items showed no difference in price between branded and private label, such as Irish Spring soap (3 bar package) which cost $2.47 for the branded and private label versions. Secret Ladies Deodorant solid cost $2.21 for the branded and private label products while Tyson Frozen Chicken Nuggets priced at $4.97 were identically matched to the private label Great Value brand. The same was true for Rice-a-Roni and the Great Value version each priced at $1 per box.

Raymond James analysts said the savings between Walmart’s branded and private label (Great Value, Equate, Sam’s Choice) basket decreased 2% from the November report. Annually, the savings decreased to 22% from 26% last December as the retailer has added more rollbacks during this holiday season.

Wal-Mart’s Savings Catcher program that provides price matching against weekly sales of its competitors does not include private label products but only branded items.

In the Florida market where Raymond James conducted its pricing survey, Wal-Mart’s branded basket prices are 7% lower than like product at Target and 17.5% cheaper than the basket at Publix.