Walmart launches new grocery brand, as it tries to hang on to inflation-fueled growth

Walmart is debuting a new grocery brand, as the discounter tries to retain the shoppers it has attracted during a period of high inflation.

On Tuesday, the big-box retailer said it will roll out a private label called Bettergoods, a line of more trend-and chef-driven foods. Most items will be priced at less than $5.

The company decided to develop the new line after shoppers indicated they wanted "elevated culinary, inspirational types of items" and healthier foods like plant-based products, said Scott Morris, senior vice president of private brands, food and consumables for Walmart U.S., in an interview with CNBC. He said the retailer designed Bettergoods for all customers, but expects it to especially appeal to younger and more affluent shoppers that it's attracted to its stores over the past few years.

Walmart is already the country's largest grocer by revenue. Nearly 60% of the company's sales in the U.S. came from its grocery business in the most recent fiscal year. It declined to say how much of its grocery revenue comes from private label. But at its warehouse club Sam's Club, private label drives about 30% of sales.

Walmart's large food business has helped it drive store and online traffic, especially as customers have watched their discretionary spending during a time of high inflation. And its low-priced reputation has helped the company attract higher-income grocery shoppers as inflation pinches budgets.

In the most recent fiscal year that ended in late January, Walmart's net sales for groceries in the U.S. rose nearly 7% year over year to $264.2 billion.

But Walmart, like other grocers, has seen room to grow its private-label business as shoppers seek new flavors and lower prices. During the Covid-19 pandemic, some