Walmart Shoppers Don’t Care Much About Premium Goods

It continues to amaze me how many premium CPG startups get sucked into the PR machine of Bentonville, Arkansas. 4,800 stores sound like a ton of volume. Except for the fact that the majority o shoppers who buy their groceries there just don’t care about your premium-priced innovation and aren’t even looking for it. And why should they? Sam Walton built his empire to eliminate distributor go-betweens and pass on the savings to you, the shopper. In return, the company has always been oriented to high volume staple items of mass interest to the broadest possible audience in each category. Nothing about this formula works, if the brands in question are completely unknown, higher priced than most of the brands at the shelf, and simply weird. If Walmart doesn’t buy in volume, it just doesn’t add value to its very loyal shopper base.

So, why on Earth would the inventor of mass retail distribution get involved in tiny volume supply lines such as CPG startups?

Not to make money, I can assure you of that.

You, the premium startup, are part of an ongoing experiment in tailored merchandising meant to pull in the next generation of family shoppers for all the other mainstream brands they sell. If having ‘you’ makes the store look ‘modern’ enough to bring that traffic in, then they’d like you to decorate their stores. But, mere decoration you are as a startup.

Only 49% of Americans shopped for groceries at Walmart stores in the past 30 days. Don’t believe the annual HH penetration hype of Walmart’s investor relations department. And among these Americans, only 9% care about organic or natural items as one of their Top 5 concerns shopping for groceries. Only 9% care similarly about minimally processed foods and beverages while shipping at Walmart (Source: The Hartman Group Food Sourcing in America in 2020).

The premium CPG brands that Walmart shoppers do want are the ones that have already scaled at other retailers and online. These are the nine-figure brands in the space. Cutting edge startups innovating at the edge of their respective categories are NOT what Walmart shoppers care about (when they are at Walmart) and not what Walmart is good at distributing, let alone merchandising.

Founders: don’t forget my final 2020 Riding the Ramp webinar on December 4! This unique strategic planning event coaches founders on how to create their own competitive strategy to attain exponential growth.

Dr. James Richardson

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