Pistachio nut butter, guacamole-flavored tortilla chips, and oat milk-based ice creams are hitting Walmart’s shelves—complete with eye-catching packaging and ringing in at less than $5 a pop. These products are among the 300 in the retailer’s new private label line Bettergoods, its first food brand launch in 20 years.
Described by Walmart as “a new elevated experience that delivers quality, unique, chef-inspired food at an incredible value,” Bettergoods is emblematic of the shifting perception of private label brands in the FMCG sector and changing consumer behaviors, especially in the United States—and retailers and national CPG brands should take heed.
The legacy of private label brands
Private-label brands have been a mainstay of Europe’s FMCG sector for decades, accounting for 35% of total category sales (SIAL Insights, 2022). But when it comes to the US, consumers have historically had a more complicated relationship with lower-cost, store-brand products.
During periods of inflation, American consumers shift from branded goods to private labels but have generally returned to branded ones once inflation stabilizes. This reflects an enduring perception that private label goods, while useful in a pinch, do not represent long-term value and quality. This stands in contrast to Europe, where, for example, 70% of consumers frequently opt for private label goods, and 50% plan to continue doing so regardless of the economic environment.
Target is a notable leader in the private label space, boasting a portfolio of more than 45 owned brands across food and beverage, clothing and apparel, home decor and furnishings, and more. It’s built a reputation for making affordable products look expensive through elevated designs that would have even the most savvy shoppers thinking they’re shopping an outside brand.
So, it’s not entirely unsurprising that Walmart’s Bettergoods seems to have taken a leaf out of Target’s private label playbook, with branding that could fit in seamlessly on the shelves with Target’s Good & Gather or Favorite Day food lines. But will the line work alongside Walmart’s existing private-label food brand Great Value, and more importantly, will it resonate with the retailer’s shoppers? The signs are pointing to yes.
What is Bettergoods all about?
With the launch of Bettergoods, it’s clear that Walmart hopes to shift the private label paradigm by creating products for life, not just for the inflation era.
You can see this first and foremost in its product development approach, which is based on three main pillars: culinary experiences, plant-based, and “made without.”
While the line includes some basic pantry staples, Walmart has astutely understood that consumer tastes, particularly among Millennials and Gen Z, have become significantly evolved, so innovation, not just low prices, can capture these shoppers. Alongside tortilla chips and Greek yogurt, their lineup includes viral products like hot honey, elevated versions of classics like mango chile salsa over the standard tomato.
We know that novelty and exploration drive younger consumers’ grocery habits—for example, 76% of meal kit subscribers choose their preferred service to explore new cuisines—and as the line expands, Walmart can continue to promise future innovation and trend-forward releases.
In another parallel to the meal kit sector, where almost half of subscribers choose their preferred service based on its accommodation of dietary restrictions, Walmart is placing plant-based and “Made Without” products at the forefront of its strategy. Offering oat-based ice cream for $3.44 a pint, while branded equivalents like Halo Top can easily cost north of $10, allows consumers to follow their values or dietary needs without sacrificing value. Similarly, the “Made Without” lineup goes beyond standard dietary restrictions like gluten-free, and offers products without artificial flavorings and sweeteners, and even includes antibiotic-free meat.
For Gen Z consumers in particular, who opt for brands that align with their values more than any other generation, these accommodations should serve as a major differentiator.
Inflation, CPG brand loyalty, and Gen Z
Inflation has significantly driven the cost of groceries up in recent years, and American consumers’ grocery shopping habits and preferences are changing. Gone are the days of brand and even store loyalty, especially for younger consumers.
As Gen Z adjusts their spending habits to keep up with the cost of living …
And more than 80% plan to hold on to these habits even if and when cost pressures lessen.
Similarly, in an effort to curb the impact of groceries on their wallets, Gen Z is more likely than the general population to regularly shop for groceries at more than one store to find the best prices. But their most frequented grocery destination? Walmart.
Walmart has reported a growing interest in its private label goods since at least 2022 when its private brand penetration grew over 160 basis points in Q4. John Furner, president and CEO of Walmart US, said, “We don’t set targets for branded versus private branded. We want to be there for any customer and make sure that quality and value are right across all product lines, but there’s definitely some acceleration to private brands.”
With Gen Z already in the store, craving affordable but social-media-worthy products, and showing an increased acceptance of private label goods, Walmart’s Bettergoods launch couldn’t be better positioned to capture the cabinet space of this cohort. The curated line is designed to satisfy shopper’s desire to buy “fun” or “experiential” foods by making it possible to do so at budget-friendly price points.
Upping the private label ante
It would be remiss not to mention the line’s product design, which—much like Target’s aforementioned private labels—is more akin to a trendy D2C brand than the often plain (and, let’s face it, cheap-looking) private label brands of yore.
Using playful chunky sans serifs, an inviting but subtle color scheme, and illustrations reminiscent of successful Gen MZ-focused brands like Olipop, Bettergoods conveys a sense of premiumness despite its low prices. This can help accustom consumers to making private label products part of their regular shop since they look similar to some of their preferred branded goods as opposed to a lower-quality alternative.
Although the majority of the products in the Bettergoods line are priced under $5 (with the most expensive reaching $15), the elevated yet approachable branding changes the experience of shopping a private label to something that feels premium and exciting.
Timed, targeted, and Target-ed
After two decades without private food label innovation, Walmart’s launch of Bettergoods says a lot about where FMCG and private label retail are headed.
Even as inflation begins to ease pressure on food prices, US shoppers have begun to change their tune on private label goods and aren’t turning back. As retailers like Walmart and Target keep investing in owned brands, private labels will continue to garner greater market share and put pressure on national brands to innovate on price, quality, and innovation versus relying on a legacy of loyalty or name recognition.
By placing innovation and trend-forwardness at the center of its product development and design strategy, Walmart is capitalizing on younger consumers’ desire for premiumness and novelty. Plus, with products that accommodate dietary restrictions without fleecing shoppers at checkout, Bettergoods has the potential to generate brand love and loyalty among a growing segment of consumers. And because of its data operation and production capabilities, Walmart can rapidly respond to consumer trends and develop or retool products in real time.
As consumers, Americans in particular, become increasingly open to and excited about shopping private label brands, retailers—from grocery stores to big box stores and beyond—have an exciting opportunity to capitalize. By emulating Target’s, and now Walmart’s, strategy of responding to users’ evolving needs, identifying segments of the market that are underserved or overcharged, and creating private label brands that feel premium without sacrificing value, retailers can gain and strengthen customer loyalty in an age when CPG loyalty is up for grabs.
Questions?
Senior Strategist