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Is Wal-Mart onto something?

Wal-Mart is in the process of hiring 75 people for its private-label business -- specifically, "Great Value" -- to oversee product development and purchases, according to Brian Sharoff, president of the Private Label Manufacturers Association.

Though Wal-Mart generates most of its revenue from national brands, it is following the path of many retailers by responding to the consumers' demand for lower priced private-label products. According to the group's research, 30% of consumers are currently buying more private-label items than a year ago. The consumer is on the lookout for private-label products because they generally cost 5% to 20% less than name brand products depending on the category, including lawn and garden products.

Private-label products refer to non-branded or off-branded products, as well as products sold under a store's own brand name -- such as the Lowe's Kobalt brand. Wal-Mart's Great Value was first introduced in 1993 and is being revamped with new products and new packaging.

Of course, the growth of private-label products is not new. Private-label brands been gaining share for the past decade, and some experts say these gains are one of the largest challenges facing established, branded packaged-goods players.

Last year sales of all private-label branded products jumped 10% to almost $83 billion. This year they are forecast to jump another 17% and may exceed $100 billion, according to the Private Label Manufacturers Association. Some of the larger chain stores in the United States are reporting almost 26% of their entire sales are now under their own private-branded products.

Rick Pontz is founder of The Lawn & Garden Performance Group
www.LGPG.com 

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