How Walmart Is Becoming A Better-for-you Grocery Destination

Source: ModernRetail, Gabriela Barkho
Photo: Walmart Groceries

Walmart is doubling down on better-for-you grocery items.

Over the last few years, the big-box retailer has gradually introduced more sustainable or natural offerings, ranging from personal care to home & garden to food and beverage. The increased demand for these trendy products at Walmart has grown so much that the retailer is now tweaking its merchandising strategy to make room for them.

In its latest investment in better-for-you, Walmart has unveiled a new section dedicated to healthy soda, called the Modern Soda set, as the category gains steam. Featured brands include fast-growing startups like Poppi, Olipop, and Culture Pop, as well as the long-established Zevia. The new section, spearheaded by Poppi as a way to better showcase new brands, is also being rolled out at other major grocery chains as well.

The move is in line with Walmart’s continued courtship of emerging brands that use clean, organic or sustainable ingredients. In the past few weeks alone, Walmart brought several young better-for-you food and beverage brands, such as frozen smoothie startup LiveMore Superfoods and tahini brand Soom.

The strategy goes beyond partnerships with emerging brands. Earlier this year, Walmart launched a private label, Bettergoods, which caters to various dietary preferences such as plant-based, dairy-free, and gluten-free. Many of these products are also made without things like artificial flavors, coloring, or added sugars.

With its mix of high-income and value-seeking shoppers, Walmart’s evolving offerings reflect the retailer’s goal of attracting and retaining these cohorts.

A modern merchandising strategy

Since entering Walmart in 2022, Poppi’s goal has been to expand nationally at the retailer. As part of the Modern Soda announcement, Poppi’s Walmart availability also grew to over 4,300 doors, a 79% increase for the brand. And starting this month, Walmart stores increased Poppi SKUs from five to 17. Across participating retailers, Poppi expects a 100% lift in incremental sales from the new Modern Soda program.

Poppi CEO Chris Hall told Modern Retail that the brand is focused on national distribution in an effort to penetrate more households.

While better-for-you sodas have been rising in popularity over the last few years, Hall said that this new Modern Soda aisle shows Walmart as a trailblazer in the merchandising space. “Walmart was one of the first retailers to come on board,” he said. In addition to Walmart, other retailers showcasing the Modern Soda set include Giant Foods, Safeway, Alberson’s, Kroger, Publix and Target. “Walmart was probably the most aggressive with providing space,” Hall said. “We partnered with our retailers to advise them on this category’s management.”

“We went chain-wide with Walmart, then got more space and had more items added to the set,” Hall said. “Plus, a better location in the store,” referring to the new Modern Soda section.

As it grew its footprint, Poppi’s research showed shoppers were looking for it in the traditional soda aisle, not the health and natural areas where some retailers placed it. “And with that, we started to partner with our retailers because there was a hodgepodge of where Poppi or the competition is found throughout the store,” Hall said. Now that it’s sold as part of a cohesive set alongside competitors, Poppi expects sales to help it grow better incrementally.

In October, the tahini brand Soom began rolling out at 989 Walmart stores, where it’s merchandised in the nut butter aisle next to brands like Justin’s and private labels.

Soom co-founder and CEO Amy Zitelman said Walmart provides a more diverse customer for the brand. Until now, Soom’s biggest retail launch came in 2023 with Whole Foods. Two years ago, Soom was sold in 350 stores, and the Walmart entry has the company finishing this year at 4,500.

Unlike at natural grocers, Zitelman said the Walmart customer “could be someone who is buying diapers and adding products like our tahini for a recipe while checking out.”

Merging value and trendy products

Walmart’s mass audience presents brands with both an opportunity and some hurdles. It attracts both higher-income households that flocked to the retailer recently, as well as shoppers who are more price-conscious. That led Walmart to diversify the types of products it offers to cater to them across the board.

Bryan Gildenberg, founder of Confluencer Commerce, said that over the past few years, Walmart has been “attempting to democratize access to brands that have this type of [better-for-you] persona, but in a much more economic way.”

“The people who grew up with Walmart now expect the retailer to have these types of products,” Gildenberg said.

Unlike natural grocers like Whole Foods, Walmart shoppers tend to shop across many price ranges depending on their preferences. “The Walmart customer doesn’t have to buy everything organic or better-for-you,” Gildenberg said.

Thus, when entering Walmart, better-for-you grocery brands know they have to offer value alongside their propositions, like organic or clean ingredients.

“Walmart is an everyday low-price retailer, so they don’t do as many promo cycles as other grocery chains,” said Hall. “So this year, we brought on another co-packer and now have a professional supply chain network to service [Walmart].”

Like Poppi, Soom also negotiated with its manufacturer to provide a competitive price on Soom at Walmart. “I would say our sweet spot is in the $8 range at most retailers,” Zitelman said. “But once you’re in, there is not that constant grind of promotions other retailers expect,” she said. “Their everyday low price is a big help for brands like ours that are being diligent with our cash flow.”

Hall credited Walmart for being a mega retailer jumping on emerging trends early, like healthy soda. “It shows that their team is really paying attention to what consumers’ needs are, and they’re designing their store around that,” he said.

https://www.modernretail.co/operations/how-walmart-is-becoming-a-better-for-you-grocery-destination