Wal-Mart could undercut sales of major brands
Costco (COST) has a large line of private label products. People who do not want to buy name-brand products and pay the premiums can buy similar products created for Costco and buy them at a substantial discount. The trend is moving to Wal-Mart (WMT) and, because of its size, the move could cost premium product producers a lot of sales.
According toMarketWatch, "Wal-Mart this month reintroduced its Great Value brand, first unveiled in 1993, with expansion into 80 new products, from organic cage-free eggs to thin-crust pizza."
A look at the Wal-Mart web site shows that the world's largest retailer sells everything from French's Mustard to Ocean Spray Cranberry Juice. Firms like Campbell's (CPM) could end up competing with one of its largest distributors.
With the economy in deep recession, it was inevitable that consumers looking for value would be served by product innovation from retailers like Wal-Mart. What may not have been so clear is the collateral damage to big branded products companies.
Douglas A. McIntyre is an editor at 24/7 Wall St.