Retail

Millennials Are Prized Territory In Grocery Wars

Walmart may be America’s biggest retailer and jockeying for a position as one of its biggest grocers, too — but millennials aren’t buying it. Why not? The big box retailer has ramped up its efforts to reach this generation — to little avail, so far.

A year of acquisitions highlighted a clear strategy to win over younger shoppers by bringing millennial favorites such as Bonobos, Modcloth and multiple online shoe retailers under the Walmart umbrella. But, just because Walmart now owns those eCommerce avenues doesn’t mean it’s translating to more millennial traffic in its own stores, whether virtual or brick and mortar.

Even after acquiring Jet.com last year for approximately $3 billion, Walmart has struggled to reach the younger demographic with its private label grocery brands Great Value, Equate and Sam’s Choice. So, if moving its grocery products online won’t reach younger shoppers, what will? Walmart’s new strategy suggests it may be a question of branding.

That’s why the Walmart-owned Jet.com is getting its own private-label grocery brand, Uniquely J, which will initially stock approximately 60 nonperishable food and household products, Fortune reported. In another few months, baby, beauty and pet products are also slated to stock the virtual shelves — all catering to the needs of young urban adults, also known as “metro millennials.”

The Store Brand Advantage

Fortune outlined the benefits to having an exclusive store brand. After all, store brands give retailers more control over marketing and distribution and offer higher margins. Done right, a store brand can drum up as much as 20 percent of sales, as has been the case with Costco Wholesale’s store brand Kirkland.

Target has also been successful with its private-label products. In addition to its popular health and wellness line, it gained significant traction with its children’s fashion line, Cat & Jack, which became a $2 billion brand within a single year. Customers also like the retailer’s Pillowfort kids’ home goods.

But, one of the biggest drivers of foot traffic for Target — and a move that Walmart was quick to copy — has been the introduction of baby products. The idea is to strengthen the store’s position among (once again) younger consumers as they enter their family-starting and home-investment years to create lifelong customers of the brand.

Grocery has the potential to play a similar role for a retailer that can make its voice heard in the melee, which is hard to do with every grocer in the U.S. (and some outsiders like Lidl and Aldi, to boot) leveraging the same strategies at the same time. They’re all taking grocery shopping online. They’re all trying out delivery and pick-up options. They’re all persistently undercutting one another’s prices. In the grocery wars, is creating a new store brand really an advantage?

Building It To Sell

For Walmart, the answer could be yes. This latest move suggests that the issue with Walmart’s existing brands is not the products themselves, but their association with Walmart as a larger brand. Jet.com, on the other hand, already has an in with millennial consumers, so why not let that site do the heavy lifting within the demographic? The time to win these customers is now, while they are still developing the habits and loyalties that will carry them through their adult lives.

What the Uniquely J products all have in common is this: They’re higher-end than what shoppers can find under the Great Value, Equate and Sam’s Choice store brands. The new Jet.com generic line plays to a whole different set of values. Younger shoppers want products that are organic and fair trade, and ethically and environmentally responsible.

Sort of like the ones they can get from Whole Foods, which begs the question — will such shoppers convert to this new Walmart generic line, or just keep buying what they’re buying? Statistics show that millennials are open to trying new brands, but it may depend on whether Uniquely J strikes them as “new,” as well as on how much they’re liking Amazon’s Whole Foods as a grocery store.

According to Engadget, packaging is another big part of the branding Walmart is attempting to revamp with Uniquely J, leveraging aesthetics such as a henna tattoo-style skull adorning a bag of coffee. A whole line of snacks is dotted with little speech bubbles reading “Nom nom.”

Engadget suggests this may be another area where Walmart doesn’t totally understand the demographic it’s trying to reach. It seems the company is working really hard with the packaging, but it may be better off letting the products speak for themselves.

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