Walmart’s strategy to launch apparel, home brands is being tested

Scoop is one of Walmart’s exclusive fashion brands. It has also achieved deals with national brands such as BCBG Paris.

Melissa Repko | CNBC

SPRINGDALE, Arkansas – Mannequin dressed up. Sleek furniture and colorful swimwear are on display. And store signs promote an exclusive and nationally recognized brand.

WalmartThe redesigned SuperCenter, located just 16 miles from its headquarters in Northwest Arkansas, reflects the retailer’s ambitions to attract more customers to their stores and websites to fill their closets and living rooms, along with their refrigerators.

This is the retailer’s new model and it will soon be available nationwide. Chief Commercial Officer Charles Redfield said Walmart plans to open 30 more redesigned stores by the end of January and hundreds more over the next financial year.

The locations will vary slightly, he said, and will feature different elements of the pilot store. They will be used to test and learn, he said, before Walmart rolls out the interface more widely.

Walmart is the nation’s largest grocery store by revenue, but it wants to boost sales of higher-margin items like clothing. Over the past five years, retailers have launching new brands and partnerships with companies like Reebok, Distance and Justice to expand its offerings in clothing, homeware and other discretionary categories. These brands often have higher price points and focus on style. Many are expanding to more of Walmart’s larger stores.

Retailer’s strategy is getting more urgent, after Walmart’s first-quarter earnings Wall Street disappoints last month and cuts profit expectations. Walmart’s merchandise mix of the period contribution to its income is missed. As customers spend more on groceries and gas due to inflation, some have decided against buying other more profitable items like clothing and TVs, which tend to increase profits.

A changing consumer

The decline in discretionary spending is affecting retailers as a whole, especially as companies pass the one-year period before shoppers get extra dollars from stimulus checks. For Walmart, U.S. aggregate sales fell in the first quarter, bringing in fewer dollars year-over-year, even as total U.S. net sales rose to $96.9 billion, according to Walmart. Walmart records.

For complicated troubles, retailers – incl Target, Kohl’s and American Eagle Outfitters – has increased excess inventory, as consumers skip some of the pandemic’s popular items, review budgets and decide to spend on travel or dining instead of purchases.

Walmart reports that it also has a surplus, with inventory levels up about 33% from a year earlier. US CEO John Furner said last week at an investor day that it will take “a few quarters” to get back to where the retailer wants to be. He estimates that about 20% of that balance is merchandise that the company “just wants to ignore.” The company declined to comment further on its merchandising strategy, after Target shared its active inventory plans.

About 32% of Walmart’s net sales in the US have come from general merchandise in recent years, according to company filings. That number dropped to 28% in the most recent quarter. At Target, 54% of sales come from general merchandise, according to the company’s most recent annual report.

There’s a big opportunity for Walmart if it can use the frequency of grocery shopping in stores and popularity of online options like curbside pickup Robby Ohmes, retail analyst for Bank of America, said to lift overall merchandise sales.

Plus, he said, escalating prices could encourage new or occasional Walmart shoppers to offer discounts to buyers.

“Everybody manages inflation,” Ohmes said. “There will be groups of people going to Walmart who don’t normally – so they can get a better flow of customers as people become more value-conscious.”

Walmart is expanding prices in its beauty division. It recently added a “Searching Beauty” display with makeup, skin care, hair, and other items for $3, $5, or $9 each. It also sells prestige brands through a new deal with British beauty retailer SpaceNK.

Melissa Repko | CNBC

The attraction of lower prices

Across its website and increasingly in its stores, Walmart has expanded its style and price range. Along with cheap basics, it also sells apparel and outerwear from exclusive brands, Scoop and Free Assembly, which customers can pack for vacation or party wear. It carries jeans that customers can wear to dinner from Sofia Jeans, an exclusive brand developed with actress Sofia Vergara.

And back home, Walmart is selling even more aspirational styles — including a collection developed with Clea Shearer and Joanna Teplin, the stars behind Netflix’s “The Home Edit.”

In Walmart’s redesigned store in Arkansas, a display shows Thyme & True, one of the retailer’s exclusive home brands. Buyers can scan QR codes to learn more about items or order online.

CEO Doug McMillon said Walmart’s reach will help the company weather periods of inflation better.

At an investor day earlier this month, he and other Walmart executives emphasized that the retailer will continue to offer entry-level pricing to customers on a tight budget. It will have those low prices not only on staples like rice, cans of tuna, macaroni and cheese, but also on casual items like t-shirts and tennis balls.

But it could also attract customers who have more money to spend, McMillon said.

“As you scale your earnings, how many of those customers can you attract in areas you might not do business with as often?” he say. “Can we shift some of the goods to clothing and home appliances and maybe even some consumer goods when people are even more value-conscious?”

According to Redfield, Walmart attracts consumers for basic items and groceries, but loses them when they shop for other items.

“They had to go somewhere else to get what they wanted from a style and quality standpoint, so we said, ‘We’ve got to fix that,'” he said in an interview.

Walmart has launched exclusive clothing brands, including the Love & Sports swimwear and swimwear line, to push customers to buy more general merchandise. These brands are front and center at a new store in Springdale, Ark., near Walmart’s headquarters.

Melissa Repko | CNBC

Silkworm cakes, craft beer and women’s goods

Inside the redesigned store in Northwest Arkansas, the clothing department features fewer shelves and wider aisles to encourage searching. It has dedicated areas like mini-stores for national brands, such as Reebok and children’s clothing brand Justice. And it puts Walmart’s own fashion and homeware brands front and center with dummies and displays suggesting how to put together an outfit or a room.

Walmart offers direct-to-consumer brands that resonate with younger, social-savvy customers with more space in stores, including Billie’s shaving company and the company. Jinx dog food company.

One of the other big changes? Smaller price list near national clothing brands and Walmart’s enhanced clothing brands – a big break from the trend of retailers to make the numbers big and bold.

“We’re selling clothes in a grocery store, but that doesn’t mean we have to sell,” said Alvis Washington, Walmart vice president of marketing, store design, innovation and experience. clothes are like grocery stores.” “Clothes are a discretionary category. It’s emotional. You want them to love fashion.”

“This is where you really want them to see, feel, touch the item and then confirm the choice by looking at the price on it,” says Washington. “We’re letting the product be the hero and setting the tone.”

Even in the grocery department, the store has a different look. The wine bar is larger and includes expensive red wines and champagne on the shelves. The craft beer section is also outstanding. Both changes are geared towards a more trendy younger generation customer, Redfield said.

“We’re going to sell a lot of underwear and socks,” he said. “We sell a lot of underwear and socks. We’ll continue to sell that, but we’re not going to force our customers to go elsewhere when they want something special.”

Source link


News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button