Dive Brief:

• Walmart has introduced a new Italian line under its Sam’s Choice store label, according to a company release. The line, which the retailer developed in concert with the Italian Trade Agency, features 40 items, including sauces, salad dressings, various pastas and boxed dinners.
• At an investors conference back in March, according to CNBC, Walmart President and CEO Doug McMillon said the company is focused on growing its private label footprint. “Having a private brand from a margin mix point of view has always been important, but it is even more important now,” he said, according to the network. 
• Walmart’s line extension comes at a time when competitors like Kroger, Aldi and Target are expanding their store brand grocery assortments as well. Consumer interest is a major factor: According to research firm IRI, two-thirds of U.S. shoppers plan to purchase more private label products over the next six months.

Dive Insight:

Walmart’s new Sam’s Choice Italia line came out the same week the company's e-commerce subsidiary Jet released its first private label line, Uniquely J. That selection, which comes with bold packaging and eye-catching selections like “Badass Espresso” coffee, is aimed at millennial shoppers, and viewed throughout the industry as Walmart’s response to Amazon’s and Whole Foods’ private label growth.

Sam’s Choice Italia also shows that Walmart, despite the predominance of national brands on its shelves, is also eager to pursue the growth opportunities store brands present. As IRI’s research shows, consumers are becoming increasingly accepting of private label, and now seek out items for their prices as well as their quality. Private label makes up 17% of grocery sales, according to the Private Label Manufacturers Association.

Walmart doesn’t have brands that are as sophisticated as Kroger’s Simple Truth or Target’s Archer Farms. But the company has significant resources to put into its private label growth, and can quickly scale up lines like Sam’s Choice Italia. It can also use private label to pressure national brands to offer even more favorable pricing.

As far as the choice of Italian cuisine goes, this was likely a no-brainer for Walmart. According to a 2015 survey by the National Restaurant Association, Italian is far and away the most popular cuisine in America, enjoyed at least once a month by 61% of consumers.

As Walmart grows its private label footprint, grocers throughout the industry are also growing theirs. Kroger, which has seen its store brand sales shoot up 37% since 2011, says it plans to continue investing in brands like Simple Truth as part of its Restock Kroger growth initiative. Discounters Aldi and Lidl stock predominantly store brands, including numerous award-winning items. Even struggling companies like Southeastern Grocers are putting a lot of money into their private collections.

In an intensely competitive industry, grocers want to offer unique products that shoppers can’t find anywhere else. Private label provides this exclusivity, along with attractive margins to boot. Products rolling out are increasingly sophisticated from a taste and marketing perspective, drawing more consumer dollars while also putting national brands on notice.