When Walmart called on Lord & Taylor, we should have known it was not to cry “uncle.”
With a selection of aspirational new apparel brands, a redesigned online home section and alignments with big names like Bonobos and, yes, Lord & Taylor, Walmart appears to have assembled a strategy for winning style-conscious shoppers while maintaining its price-conscious core. It has also evidently determined the right balance of flair vs. functional for competing with Amazon and Target.
The goal may make sense, but it’s not guaranteed. Walmart wants more upscale, fashion-focused shoppers for their individual sales gains and the bigger basket each one could generate. However, it’s gotten lost on this path before. In 2005, Walmart’s Metro 7 fashion brand tanked; later designer lines with Max Azria and Norma Kamali also withered.
What makes this run different is Walmart appears to be applying lessons from the past to a potentially more open-minded market base, thanks to a fashion world cracked wide open to the masses by technology.
Could its latest blend of fashion actions cause people to refer to the low-cost leader as “Walmarché?” History will tell.
From Faded Glory to Time and Tru
Let’s start that history with how Target changed low-priced retail. In 1999, Target penned a designer deal with the architect Michael Graves, triggering a wholesale change in what people could expect from value shopping. It was the first of more than 75 deals in which well-recognized designers, from Isaac Mizrahi to Lilly Pulitzer, developed exclusive and affordable lines for Target.
At that time, Amazon had just begun expanding beyond books and had yet to make a profit. Walmart, meanwhile, focused on its reliable model of high volume, low prices and low frills (including in its clothing). While Target posted 1999 revenue of $33.7 billion and Amazon of $1.6 billion, Walmart counted sales of $156 billion.
Technology has enabled unprecedented speed and opportunity, however. Amazon in 2017 ranked as the seventh-largest retailer in the nation and in December posted sales of $178 billion. The shoppers may not be exactly the same, but Amazon has enough scale to give giant rivals a case of the nerves. Target has, for instance, been reviving its private labels.
Walmart has little choice but to claim its own territory, and then some.
So in the past year, Walmart has purchased the niche brands Shoebuy, ModCloth and Bonobos, and in October entered into a partnership with Lord & Taylor to feature its apparel online. In February it launched four private labels for women, men and children — Time and Tru, Terra & Sky (plus-size), Wonder Nation (kids) and George (men) — with a kicky TV advertising spot that conjures images of family vacations and breezy living, not price comparisons.
On the home front, Walmart is expanding its furnishings at Walmart.com to include upscale-looking, trendier styles from rustic to Scandinavian (hear that, Ikea?). It’s the first step in a broader refurbishing of Walmart.com, which will better showcase apparel later in 2018.
The stores will be refreshed for the new clothing lines as well, with signage and photography and, in some locations, better fitting rooms. Fittingly, Walmart is at the same time showing the door to older brands White Stag, Faded Glory and the George’s U.S. women’s collection.
And it plans to do it all while keeping prices in check. The new clothing lines will range from $5 to $30.
3 Reasons a Walmarché Could Emerge
Price alone won’t likely be enough to turn Walmart into a fashion destination, at least not with new shoppers. However, three other important factors could make the timing right for the emergence of Walmarché.
1. Its food. Walmart may be investing in style, but its groceries attract more frequent shopper visits, and the retailer is gaining the younger ones. Walmart ranks first among millennial shoppers for food, according to the Condé Nast and Goldman Sachs “2017 Food Love List.” The report credits Walmart’s one-stop convenience, important to this demographic. This matters for fashion because younger shoppers (up into their 30s) are prime candidates for the category. Once they’re in the store for fruit and cereal, they are more likely to browse the new apparel displays.
2. Its technology. Walmart may have a reputation for low-frills shopping, but it isn’t skimping on the technology that makes the trip easier. In January it expanded its Scan & Go cashier-free technology to a total of 125 stores, ahead of Kroger and Amazon. Additionally, it offers online voice shopping through Google Home, simplified returns through its Mobile Express Returns app and free two-day shipping (without a membership fee). Walmart is also investing in facial recognition technology to detect when shoppers are unhappy, and working to eliminate those pain points.
3. Its price. If Walmart can deliver aspirational styles for the home and body at lower prices than Amazon and Target, then it’s got an edge. A chief benefit of private labels is they generate higher profit margins because there’s no middleman. And with Walmart’s scale, it should be able to negotiate lower manufacturing costs. If these savings are rolled into the pricing for consumers, it could generate even higher shopper interest. The only outstanding question is whether the savings will be used in part to establish the store and digital experience for its new brands.
Walmart’s latest runway experience will be marked by many differences, and the walk will be completely altered given the shifts in technology and today’s cultural changes. If Walmart wants to be successful with Lord & Taylor, its new private labels and furnishings, it will need to “work it” to win the battle.