Wal-Mart private-label fills value gap: CFO

by Eric Schroeder
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NEW YORK – While the nation’s largest grocery retailer plans to offer more private-label products later this year, it is not a strategy that will be employed to “replace or pump up profit,” said Charles Holley, executive vice-president and chief financial officer of Wal-Mart Stores Inc.

Speaking to analysts at the Bank of America Merrill Lynch Consumer & Retail Conference held March 12 in New York, Holley said Wal-Mart doesn’t view private-label like some other retailers, and considers itself “a brand retailer” that “likes to sell brands.”

“We use private-label to fill in gaps where we see there is a value gap for our customers,” Holley said. “So, it is really very dependent on a category or a subcategory. Now having said that, we are improving our private-label. The quality, even the packaging, is changing. You will see more, I think, private-label in certain categories later in this year, but it is not a strategy to replace or pump up profit. It is really a strategy to have an offering of value that is just not there right now for the customer.”

Asked whether Wal-Mart is changing its merchandising mix in grocery to respond to changes in consumer behavior, such as demand for “real food and food with authenticity,” Holley replied in the affirmative.

“If you have watched us over the years, you know that we have put more organic in our assortment,” he said. “You have also known that we are partnering with a number of vendors and universities looking at sustainability type indexes that consumers can rely on to understand the food that they are eating.

“We are not trying to tell consumers what to eat, but … we want to work with our vendor partners and others in the government to educate consumers about what they should eat, what is good for them. We think that is very important.”

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