RETAIL SALE Walmart launched many clothing and home brands
SpringDale, Arkansas Mannequins in costume. Striking displays of chic furniture and colorful swimwear. And signs for stores that promote exclusive and nationally recognized brands.
Walmart’s redesigned Super Center, located just 16 miles from its Northwest Arkansas headquarters, reflects the retailer’s ambitions to get more customers turning to its stores and website to stock their closets and living rooms, along with their refrigerators. .
It’s the retailer’s new model, and it will soon roll out across the country. Walmart plans to open 30 more redesigned stores by the end of January and hundreds more in the next fiscal year, chief merchandising officer Charles Redfield said. He said that the locations will vary slightly and will have different items from the pilot store. They will be used for testing and learning before Walmart releases the look more widely, he said.
Walmart is the nation’s largest grocery store by revenue, but it wants to drive more sales of higher-margin items like clothing. Over the past five years, the retailer has launched new brands and partnered with the likes of Reebok, Gap and Justice to expand its offerings across apparel, home and other discretionary categories.
Those brands often come with a higher price tag and a focus on style. Many are expanding into more big Walmart stores. The retailer’s strategy has taken on more urgency after Walmart’s first-quarter profit disappointed Wall Street last month and lowered earnings expectations.
Walmart’s product mix in the period contributed to its profit loss. As customers spent more on groceries and gasoline due to inflation, some decided not to buy other more profitable items like clothes and televisions, the same purchases that tend to boost profits.
A changing consumer A pullback in discretionary spending is hitting retailers across the board, especially as businesses move past a period last year when shoppers had extra dollars from stimulus checks. For Walmart, US general merchandise sales fell in the first quarter, attracting fewer dollars than in the same period a year earlier, even as overall US net sales rose to $96.9 billion. , according to documents filed by Walmart.
Compounding the problems, retailers including Target, Kohl’s and American Eagle Outfitters have built up excess inventory as consumers shun some popular pandemic items, eye the budget and decide to spend on travel or dining out instead. of goods.
Walmart reported that it also had excess merchandise, with inventory levels up about 33% compared to the prior year. US Chief Executive Officer John Furner said at an investor day last week that it will take “a couple of quarters” to get back to where the retailer wants to be.
He estimated that about 20% of that surplus is merchandise the company would like to “just wish away.” The company declined to comment further on its strategy to sell through its merchandise after Target shared its aggressive 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 fell to 28% in the most recent quarter. At Target, 54% of sales come from general merchandise, according to its most recent annual report.
There’s a big opportunity for Walmart if it can use the frequency of in-store grocery shopping and the popularity of online options, like curbside pickup, to boost overall merchandise sales, said Robby Ohmes, a retail analyst. from Bank of America.
In addition, he said, rising prices may encourage a new or infrequent Walmart shopper to give the discount store a try. Everyone is managing inflation,” Ohmes said. “There will be groups of people that will meet at Walmart that they normally wouldn’t, so they may get a better flow of customers as people become more value-conscious.”