What Went Wrong With Walmart's Great Value Strategy?

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May 25, 2010

What’s behind Walmart’s first drop in customer traffic and revenue in its history? According to author and journalist Darlene Quinn, it’s because the world’s largest retailer got greedy and took its eye off the customer.

“Wal-Mart's hiccup occurred when the retailer, in an effort to increase sales on their store brands, began eliminating comparable name brand items from their shelves late last year,” she wrote. “When they wiped more than 300 familiar products off their shelves, something unexpected happened -- many shoppers began buying groceries elsewhere.”

Shoppers decided that they would rather pay more for groceries in order to bring home preferred brands rather than switch to Great Value. “So, they left, and in far greater numbers than Walmart ever anticipated.”

Pointing to research conducted by Kantar Retail-Management Ventures Inc. and Advertising Age, Walmart's sales declined 2 percent while all of its key competitors -- Target, Kmart, Costco, Family Dollar, Dollar Tree and Dollar General -- all posted gains.

“In my mind, there really was no need for Walmart to make the change. I think they just got a little greedy. They are the 800-pound gorilla, so they thought they'd throw their weight around a little to chart better profit performance,” Quinn wrote. “What they discovered is that the real 800-pound gorilla is the consumer.”

Darlene Quinn is also the author of “Webs of Power,” a novel about the back-room wheeling and dealing of a national retail chain, based primarily on real-life people and companies Quinn encountered during her retail career.

A spirited reader who disagreed with Quinn’s point of view commented: “Tripe. Nothing to do with reduced SKUs. Competition is more nimble ... i.e. customers are tired of the tremendous size of the box for now such little savings. And conversely, competition began carrying more of said name brands. Check out the SKU selection at the discounters ... they have increased dramatically. Stop throwing darts at a segment you obviously know little about.”

Read These Related Articles:

• Wal-Mart Changes the Store Brands Game
• Bharti Stores in India Sell Wal-Mart's Private Label Brands
• Wal-Mart's Great Value Beats Out H-E-B and Randalls in a Store Brands Taste Test
• Wal-Mart Brings More Store Brands to India
• Wal-Mart CMO: We Are Going to Be a House of Brands

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