Why Walmart is launching a new grocery brand with most items less than $5

Walmart is developing a new grocery brand, as they try to retain the shoppers it has attracted during a period of high inflation.

Shoppers indicated they wanted better culinary, inspirational types of items, and healthier options including plant-based products. The new brand is Bettergoods--more tend and chef-driven foods with most (not all) items priced at under $5.

While the new products are for all customers, Walmart is targeting younger and more affluent customers that have started shopping there in the past few years.

Walmart is already the country's largest grocer by revenue. Nearly 60% of the company's sales in the U.S. came from its grocery business in the most recent fiscal year. It declined to say how much of its grocery revenue comes from private label. But at its warehouse club Sam's Club, private label drives about 30% of sales. And as customers have watched their discretionary spending turning to the store,its low priced reputation drew higher income customers as inflation affected their budgets.

During the Covid-19 pandemic, some national brands' products ran low at stores and caused customers to start buying the retailers' own brands. And inflation has gotten many to try store brands which are often less expensive; plus the growth of low-priced grocery chains like Aldi, Lidl and Trader Joe's — which prominently feature their own private labels rather than national ones — and the popularity of Costco's Kirkland has changed customers' perception of store brands. Grocers have also overhauled their private-label approach. Instead of relying on basic items like canned peas or copycat items like a lower-priced box of cereal that resembles Cheerios to make up their store brand, retailers began debuting more unique food items.

Walmart's new grocery brand, Bettergoods, will be made up of items across many categories including frozen foods, dairy and snacks ranging from under $2 to under $15. The products will likely be items with more of a culinary flair, such as a jarred creamy corn jalapeño chowder; items that are plant-based, such as a pint of oat milk nondairy ice cream; or items that exclude certain ingredients, such as gluten- and antibiotic-free chicken nuggets. The new line will be added to its already successful Great Value line of products.