Wal-Mart Reintroduces Brands After Customer Complaints

Posted by Sara Zucker on March 12, 2010 05:21 PM

Customers who flock to Wal-Mart typically purchase a variety of products in one comprehensive trip. However, consumers were irked recently when they discovered the big box brand had discontinued many of it products from its shelves.

Hoping to increase sales in its US locations, Wal-Mart began an in-store "Project Impact" revamp in September, exchanging products that were collecting dust for more popular lines. According to the store's US Chief Operating Officer Bill Simon, certain “flavors, items, [and] sizes” didn't sell and were pulled from shelves. Sounds logical, right? Well, Wal-Mart quickly realized that the move greatly upset some loyal customers as complaints piled in.

Rather than buying a similar product or brand – but not the exact one customers had an attachment to – for $1 more at Wal-Mart, shoppers instead skipped shopping at Wal-Mart altogether and went to competitors that carried their favorite products. It turns out certain sizes and flavors for many food products are game-changing factors for shoppers, and that reality wasn't lost on Wal-Mart. According to Simon, “[We] lose an $80 basket or a $60 basket and not just the dollar for the one-pound brown rice.”

Wal-Mart has begun re-stocking requests, almost 300 in total, to make peace with disgruntled customers. This swift reconciliation serves as a testament to the flexibility and openness of Wal-Mart as a brand, but the retailer is still looking for a long-term solution to cutting costs rather than "limited time" offers and plans to decrease prices slowly. Lower prices, presumably, are not something that will upset customers.

More about: Retail, Wal-Mart, Food, Beverages

Jatin Rai says:

I recently learnt that Walmart in Canada has started removing brands, that are not among top 3 in their category, off its shelves. Well experience from above article tell me that this move could be blunder! If consumer is extremely particular about the SKU or flavor (which might not be among top 3 SKUs) then imagine how particular he must be for a brand! There are many brands which might not be in even Top 5 but still have thousands of fan following.

March 15, 2010 06:43 AM #

Shar Valleau says:

Make no mistake - Wal-mart's brand overhaul was not just about eliminating slow moving brands. Part of the strategy was to replace popular, fast moving "branded generic" products with
Wal-mart's own brand in a comparable offering. The strategy was wise on paper, but failed to take into account the brand loyalty of those consumers who had come to depend upon finding their favorite product for a great price at Wal-mart. That consumer didn't resented Wal-mart's insinuation of their own generic brand, except as that substitution took away what the consumer construes as a right to choice. The net effect was the same in the end: the consumer began to shop at other stores for their familiar, tried-and-true other branded generic, leaving Wal-mart shelves full of their not-quite-the-same store-branded generics. Yay for Wal-mart for having the savvy to reverse a bad idea before it gets as ugly as the late-night talk show wars!

March 17, 2010 03:29 PM #

Yes, but there is one more angle to it. The recent reports show that the recession has actually brought Walmart's private labels to limelight. I don't think that removing slow moving brands was a move to push its own private labels because time was actually favoring its private labels. In the turbulent times, customers were attracted to the private labels when they compared the prices with National Brands. So in fact the aggregation of National Brands was helping the cause of comparison & advocating the private labels.

To add to it, there are two different opinions among experts. One says that once the tough times are over, consumer will return to his spending spree & sale of private labels will decline & National Brands will regain their top position. The other group says that the consumer has been impacted very deeply psychologically by the recession & he will continue with the cheaper private labels even after the normal times return.

The move to remove 'beyond #3' brands is an old tactic to improve both SPSF (Sales Per Square Foot) as well as efficiency.

March 17, 2010 03:47 PM #

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