Walmart: Asda Store Brands on Top, Marketside Stores Shutter

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October 18, 2011

In the U.S., Walmart is shuttering its Marketside concept but plans to continue utilizing the  brand elsewhere in the chain, while in the U.K. the retailer revealed Asda’s now has the fastest growing store brand.

Marketside, Walmart’s four-store test of a convenience concept, is being abandoned after three years in favor of the Walmart Express stores. But Marketside will live on as a store brand in Walmart stores, primarily used in produce and its fresh prepared food lines. Marketside brand prepared foods include Chicken Tortilla Soup, Artisan Petite Cranberry Walnut Loaf, Roasted Garlic Hummus, ready-to-heat pasta sauces and ready-to-eat refrigerated dips. Walmart has opened five Walmart Express stores in Arkansas, North Carolina and Chicago and plans to have 11 units by the end of the year.

Asda Store Brands Soar
In the U.K, private label sales are surging at Walmart’s Asda stores where the retailer’s store brands have overtaken Sainsbury’s after revamping its Chosen By You brand.

“For the first time in our history, our private-label market share is ahead of Sainsbury’s, and we’re only building on that momentum,” CEO Andy Clarke said during a presentation at the IGD conference in London, as reported by Bloomberg.

“Some of the work (Asda has) done on private label development, particularly the Chosen By You range, is really starting to change people's perception of Asda's fresh food quality,” said David Cheesewright, executive vice president, Walmart, and CEO of a new Walmart regional management team, during a conference call with analysts. “And when you put together low prices and real perception on quality, that's something that really interest customers. We're seeing good progress on the back of those two dynamics.”

Asda revamped its mid-tier Chosen By You label last year. The 4,000 SKU line is now the fastest-growing private label brand in the U.K., Clarke said. Asda also offers the premium Extra Special brand and value-orientated Smart Price label in its store brands portfolio. Sainsbury’s has been updating and adding new products to its 6,000 mid-tier By Sainsbury’s line as shoppers trade down to value priced private label goods.

Asda is also claiming victory in a nationwide price competition, which guarantees prices 10 percent lower than competitors in response to Tesco’s price-cutting and Sainsbury’s brand match programs. “We are still very committed to the Asda price guarantee,” Clarke said.

Walmart's U.S. Focus
Walmart hosted its annual meeting with analysts last week, and much of the focus in the U.S. is on bringing back national brands as it continues to reverse the ill-fated Project Impact. That plan removed hundreds of SKUs to clear aisles and create a less cluttered more upscale look. Shoppers revolted and Walmart has been busy wooing them back as it returns to classic merchandising methods with aisle displays, endcaps, rollbacks and the return of Action Alley.

It’s at Walmart’s warehouse club and its U.K. divisions where store brands are the focus as they continue to grow. The retailer introduced three new lines at Sam’s Club this year -- Artisan fresh in deli and bakery, Simply Right in baby and health and beauty aids, and Daily Chef in frozen foods and refrigerated products -- and is rebranding 500 SKUs under the new store brands, shifting away from the Sam’s Club Member’s Mark label.

SBD Views: Walmart’s decision to abandon the Marketside format marks a tighter focus on their Neighborhood Market and Walmart Express as their small footprint stores of the future. It reminds me of the late 1980s when the company was testing two formats for their push into groceries -- the Hypermart USA and the Walmart Supercenter formats. In 1990, Walmart shut Hypermart USA and went “all in” on the Walmart Supercenter. The bet paid off big as Walmart took the food industry by storm and became America’s #1 food retailer with the Supercenter. With their sights now set on urban markets and convenience retailing, it will be interesting to see where things go from here. I suspect that once they lock in on a model, you’ll see a tsunami of these stores open across the country. All of which may be selling Marketside branded products. -- John Failla for Store Brands Decisions

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