Are D2C brands reinventing Walmart or vice-versa?
Walmart is evolving and reinventing itself and, as Andy Dunn, senior vice president of digital consumer brands at Walmart and founder of Bonobos, discussed in his session at IRCE 2019, there’s a good reason behind the shifts toward competing in new markets and online.
“Internet-driven retail doesn’t really work without brick-and-mortar,” Mr. Dunn said. “The math doesn’t work. We look at the last 20-plus years; since the IPO of Amazon there’s really only been one or two other companies that have gotten out to become let’s say $5 billion public companies in retail, because internet-driven retail doesn’t really make money.”
In an interview with RetailWire, Mr. Dunn explored the challenges of introducing Walmart to an urban, e-commerce savvy customer base while also making its new brands aimed at that audience work for traditional Walmart customers.
“The thing that’s really cool about Walmart is that the customer mix is reflective of the country because we’re the nation’s leading grocer,” Mr. Dunn said. “You’ve got all kinds of folks that are coming through, so I feel like our job is to develop direct to consumer brands that are purpose-driven that serve the widest possible group that we can. … What that will mean in some cases is the product is more premium for what’s typically on the Walmart floor but more in reach for the vast majority of our customers.”
As illustration, Mr. Dunn pointed to the evolution of the Allswell mattress brand and spoke of Walmart’s learning curve for digital brands. The brand’s initial launch on a standalone website, and its subsequent cross-sale on Walmart.com, were met with little enthusiasm and few sales. The team dropped the price from the $500 to $700 range to the $300 range, which caused the product to quickly sell out.
“That was that moment when it clicked for us,” Mr. Dunn said. “Our job isn’t just to replicate what’s happening with existing direct-to-consumer brands but to reinvent it with a huge swath of the core Walmart customer in mind.”
Walmart is also piloting the sale of Allswell mattress toppers in some brick-and-mortar test locations, a step in feeling out how brands built for D2C can perform with a presence on the store shelf.
“When we came in we didn’t realize that the opportunity to use the overall Walmart ecosystem to build these brands in a better way was what we were coming in to do,” Mr. Dunn said. “We thought we were coming in to keep doing things the way we were doing them at Bonobos, and the realization from Allswell has been that there’s actually a much bigger opportunity if we do it omni.”
DISCUSSION QUESTIONS: Is the D2C strategy Mr. Dunn and others at Walmart are developing to meet the needs of both urban and traditional Walmart customers the path to success? Will the public perception of Walmart 10 years from now be different than it is today?