Pop quiz (but it’s an easy one): What is Walmart’s pricing strategy? If you answered “low prices,” you get credit. But could other students make an argument for a different answer, such as “differentiated pricing”?

After decades of working, mostly successfully, to define itself as the source for consistently low retail prices, Walmart recently announced the launch of its new premium food brand, Bettergoods. It comprises quality, gourmet foods like plant-based mozzarella, bronze-cut pasta, and hot honey condiments. It represents Walmart’s largest food brand launch in more than 20 years.

So what prompted this substantial assortment shake-up? A key impetus likely stems from the inroads made by competitors like Trader Joe’s and Whole Foods, which appeal to consumers by offering premium foods that Walmart does not stock. In particular, younger, more affluent shoppers seek out creative, unexpected options, often with a focus on plant-based alternatives, that provide both aesthetic appeal and sustainable packaging.

In response, Walmart’s new Bettergoods line promises, well, better goods that can compete with other retailer’s premium food lines. Observers note some similarities with Target’s Good & Gather brand, which also aims to provide premium products. Although Trader Joe’s and Whole Foods already might have established their capacity to support the needs of health-conscious and environmentally aware consumers, Bettergoods can facilitate their choices too, by offering organic, plant-based, and specialty food items. By swamping the market with a brand introduction involving approximately 300 items, Walmart also seeks greater differentiation, such that the Bettergoods line features many products that cannot be found in other grocery stores.

The strategic introduction of Bettergoods products has relied on careful product placement in stores. Visual tie-ins and clear messaging about the product’s upscale, trendy nature typically accompany the displays, reflecting the brand’s marketing strategy. Due to Walmart’s extensive distribution network, it also can make the brand widely and quickly available.

But even as we highlight all these attempts at competitive differentiation, upscale market targets, and specialty products, we are still talking about Walmart. When Walmart introduces a premium brand, it still does so with the promise of affordability. Using its long-established low price reputation, it issues the promise to consumers that they can find organic, plant-based, gourmet Bettergoods foods in its stores, but without having to pay the extreme prices they would find to obtain the same items from a different brand or retailer.

Discussion Questions

1. Is establishing a premium food brand an appropriate strategic pricing tactic for Walmart?

Sources: Bernadette Giacomazzo, “Walmart Unveils New Premium Brand Bettergoods to Broaden Appeal,” RetailWire, April 30, 2024; Hunter Schwarz, “Why Walmart Launched Bettergoods, a New Premium Brand,” Fast Company, April 30, 2024; Walmart, “Walmart Launches Bettergoods, a New Private Brand Making Elevated Culinary Experiences Accessible for All,” Walmart Corporate, April 30, 2024; OpenAI ChatGPT, “Assistance with Research on Walmart’s Bettergoods Premium Brand,” ChatGPT, July 1, 2024.