Walmart posted a 3.1% net margin and 16.8% ROIC last cycle, and the bullish narrative is that middle-income consumers are rotating into essentials at discount prices. True. But here's what the data obscures: private label's margin expansion isn't defensive anymore—it's offensive. When dollar-store and off-brand penetration force *Walmart itself* to defend unit economics on packaged goods, the whole sector's gross margin compresses, not just the brands.

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