A box of frozen chicken and waffles under Walmart's (WMT - Get Report) Great Value private-label brand sits proudly on a counter in a room at the company's first-ever culinary innovation center that recently opened in Arkansas.
"Isn't this great? It will hit stores soon," said a Walmart exec to TheStreet at an event held at the center, quickly pointing to a product called a Pizzadilla (half quesadilla, half pizza) also donning the Great Value name. In another room, the company showed off private-label diapers and razors.
The rather eclectic new frozen foods and no frills household essentials offer a small snapshot into what's likely to be a major private-label product push by the world's largest retailer this year across all of its store concepts. A Walmart representative said the company does not disclose what percentage of sales comes from private-label goods.
Private-label products, otherwise known as store brands, are simply products on which stores put their own names or brands. They give retailers a way to set themselves apart from competitors. Consumers know they can buy a national brand such as Pepsi anywhere but they can only buy their favorite store brand at a certain store.
Consumers often love private labels because they tend to be cheaper in price relative to well-known national brands. Retailers love them as they often carry higher profit margins than national brands, which cost more for retailers to buy due to big-name companies such as Pepsi (PEP - Get Report) and General Mills (GIS - Get Report) passing along their product development and marketing expenditures.
According to a Walmart spokesman, private-label products help it offer lower-priced products to economically sensitive consumers. Also, by cutting out the large national brands, the company could move quicker to introduce innovative products.
Half pizza, half quesadilla compliments of Walmart's Great Value private label.
Sales of private-label products have been hot as U.S. consumers continue to count their pennies post-Great Recession, which is likely spurring Walmart's renewed efforts. According to Nielsen, total annual sales of store brands across supermarkets, drugstores and mass merchants rose by $2.2 billion to $118.4 billion last year, an all-time record. In the past two years alone, annual sales of store brands have increased 5%, or $5.4 billion, says Nielsen.
Walmart is already well down the path of becoming a destination for exclusive private-label merchandise.
As TheStreet recently reported, Walmart quietly began selling several craft varieties in its first line of private-label beer during the first quarter. The four versions -- Cat's Away IPA, After Party Pale Ale, Red Flag Amber and 'Round Midnight Belgian White -- are available in 12-packs for $13. In California only, the company has debuted a brand called Pacific Drift.
The Internet giant will only offer the private-label products to members of its $99-per-year Prime membership, according to reports.