It's Bettergoods' World - We're Living In It
Today, I am one day post-procedure from my endoscopy and biopsy. It has been a stressful and quite lonely time for me recently. I usually find my work to be an outlet and an opportunity to move my body throughout the day. Since coming home yesterday, I feel nothing short of miserable. I went for a drive this morning, despite the doctor's orders not to. I enjoyed my quick trip for breakfast and Halloween shopping (I know it is July), before I received a call from my nurses who instructed me to head home. Later in the day, I made my second trip outdoors to return an item to Target. I wandered around for about an hour and felt a wave of loneliness as I attempted to get in a few steps that I missed over the past two days being plastered to my bed. My doctor’s orders right now are to reduce stress. Surely, he does not understand that not only is my middle name Princess, it is also STRESS.
Tonight I thought we’d take a look at a new house brand that emerged from Walmart earlier this year that I believe is set up to compete with Target’s Good and Gather offerings. For the most part, we are familiar with Walmart’s current house brand Great Value. They offer much cheaper prices on walmart shelves, compared to larger brands like P&G and other popular conglomerates. Consider them the original “dupes” of the grocery stores. I am a fan of certain Great Value products - a lot of household odds and ends. In some of my baking, I also opt for Great Value nuts, flour, bottled water, etc. Overall, I see Great Value as a big player that has room for growth as our current economic climate scares consumers into sticking to essentials and grabbing the cheapest alternatives during grocery runs.
Now what caught my eye (well not really because I saw this coming in January), was Walmart’s introduction of Bettergoods to their house brand assortment. As many of you guys know, my diet has had to shift to all-organic and gluten free in order to minimize my stomach’s insufferable flare ups recently. As a result, I have been doing extensive research of new brands that are made with better ingredients, while maintaining that excitement for food with creative and seasonal flavors. I just would have never thought that the brand would come from Walmart. Walmart is already a logistical powerhouse in my eyes. And as a visual merchandiser, I have also had an inside ear on some of the changes that have been happening with their product presentations. Outside of the grocery aspect, Walmart is opting for cleaner lines and upscale packaging for their home and apparel lines. The product assortment has opened vastly to entice a sort of customer with a little bit more taste for home decor and an appreciation for higher quality cookware. But even through all of this, Walmart is consistently keeping their pricing low and competitive.
After taking a deeper look into Bettergoods and Walmart’s vision to “elevate their overall food experience” (I got this from their corporate news center), I started to notice a bit of a trend here. Not only could this new brand compete with Target’s Good and Gather brand, but it could also be drawing customers away from that core customer that shops the Whole Foods 365 brand. A greater amount of the Bettergoods products assortment are plant-based and organic. With prices marked between $2 and $15, there is a part of my brain that sort of wants to try one of everything and report back on the quality. After a sweep over product reviews and an intensive search on Reddit, customers are actually falling in love with this new brand, and quickly! The pricing is what is drawing them in to experiment with new products, but baby the quality has them returning week after week for items like ice cream, sea salt chips, frozen pizza.
In the future, I actually see Walmart using the Bettergoods brand to introduce speciality frozen and pre-packaged grocery meals to sort of create that “cool” effect that you get at Trader Joes. Like those strawberry and jalapeño crackers that you literally can not go find somewhere else. If they time this correctly, I can see Walmart having a well-deserved viral moment that could lead to even more growth for the company.
So far, Walmart earnings look good for the year. Revenue, net income, and net profit margins are up. A bit unrelated, but as a customer, I have noticed a bigger push for me to sign up for Walmart +. Subscription exhaustion has hit me like a Mack truck, but boy do I feel targeted for their marketing. Walmart has a new earnings call coming in Mid August and I am excited to hear what’s new!
Happy trading and enjoy your weekend outdoors, while I can not.
Frank.
