Walmart to Roll Out Private-Label Brand to Take on Amazon

The competition between retail giant Wal-Mart Stores Inc (NYSE:WMT) and online king Amazon.com, Inc. (NASDAQ:AMZN) seems to be intensifying with the former trying every means to take on the latter in the e-commerce segment. The competition is not only limited to online grocery delivery and pick up services; it has extended to gaining share of lower-priced private label brands.

Walmart to Roll Out Private-Label Brand to Take on Amazon

Amazon’s acquisition of the natural and organic foods supermarket chain Whole Foods Market, Inc. (NASDAQ:WFM) in August 2017 positioned the company well in the grocery industry and provided access to Whole Foods’ 365 brands. WMT has also been aggressively expanding in online grocery segment and recently, through its online arm Jet.com, it plans to launch its own private-label brand targeting young urban adults.

Focus on Private Labels — Need of the Hour?

Notably, customers are becoming more inclined toward private label products as they are low-cost alternatives to national brands. Walmart sells its own private-label brands like Equate, Great Value, and Sam’s Choice on Jet.com.

Companies like Costco Wholesale Corporation (NASDAQ:COST), Target Corporation (NYSE:TGT) are also focusing on private labels for boosting revenues. German discount chains Aldi and Lidl are also growing on the back of their private-label products.

Jet.com’s Private-Label Brand Uniquely J

According to New York Post, Jet.com will roll out private-label brand, Uniquely J, in few months with food categories like coffee, olive oil, laundry detergent and paper towels. For the first year, Uniquely J will initially be exclusive to Jet.com, but will later be available on Walmart.com and in WMT stores.

We believe Jet.com’s Uniquely J brand will attract young consumers thanks to its bold packaging and quality ingredients at low price. With the rising demand for private label products, Jet.com’s initiative to offer private merchandises will surely fuel sales. Also, the move is expected to slow down Amazon’s push into the grocery market with lower pricing.

Walmart’s Foray in E-Commerce

Walmart has acquired four e-commerce businesses (Bonobos, ShoeBuy, Moosejaw, ModCloth) since the Jet.com acquisition (in September 2016), which is in line with the Walmart’s expansion efforts in the e-commerce space. Recently, the company plans to invest in online cosmetics startup Birchbox. If the deal materializes, it will become the fifth e-commerce acquisition, since the Jet.com buyout.

The Zacks Rank #3 (Hold) company is trying every means to compete with brick-and-mortar rivals and e-commerce king Amazon. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

WMT has also been aggressively adopting a number of initiatives of late to gain traction in the growing online grocery shopping and delivery industry. Recently, the retailer is testing a delivery service in partnership with San Francisco-based smart-lock maker August Home and Menlo Park-based same-day delivery startup Deliv, wherein customers can get groceries delivered to their fridge directly.

Walmart has also announced a program wherein it will allow food stamp receivers to order food and groceries online. However, they will have to pick up the items from any of the five specific stores in the United States. In August, the giant retailer teamed up with Alphabet Inc’s (NASDAQ:GOOGL, NASDAQ:GOOG) Google to enter the budding voice-shopping market, following the footsteps of AMZN.

If we look into the share price performance on a year-to-date basis, we note that Walmart’s shares have rallied 13.1%, higher than the industry, which grew 5.6%.

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