Wal-Mart’s Apparel Project

Discussion
Jun 07, 2010
Tom Ryan

By Tom Ryan

Described by Women’s Wear Daily as its "perennial Achilles
heel," Wal-Mart
once more changed direction in its struggling apparel business.

"We are going back to basics in many ways," said Eduardo Castro-Wright,
who oversees Walmart’s U.S. business, at a press event
Friday following Wal-Mart’s annual meeting. "Basics as in business basics
but also basics literally in terms of the product itself. Socks and underwear
to jeans and T-shirts — that’s where we excel … We’re not a department store."

An
article in WWD recounted three recent incarnations of Wal-Mart’s
apparel strategies. First, it mimicked cheap-chic by launching Metro 7 and
George ME by Mark Eisen in 2005. Both collections were quickly discontinued.
Then, a hybrid approach called for low-cost basics accompanied by some exclusive
well-known national brands such as L.E.I., Starter, OP and Danskin. A lifestyle
collection by the designer Norma Kamali as well as a Miley Cyrus & Max
Azria juniors collection debuted last year.

In May, however, Mr. Castro-Wright
admitted that apparel was performing "below
expectations and continues to be a work in progress," apparently leading
to an even greater basics push.

"Management is convinced that apparel at mass merchants is not brand
driven, and that instead, Wal-Mart has been ‘chasing too much glitter,’" Bill
Dreher, an analyst at Deutsche Bank, told WWD.

Wal-Mart’s struggles
stand out in light of its main rival Target’s success. Observers told WWD that
Wal-Mart has never embraced designer collaborations that have worked for Target,
which requires a big advertising push and high in-store visibility. Part of
the issue, they say, are concerns that high-end fashion alienates its core
shopper. One observer believes that they don’t
want any brand to "overshadow" the Wal-Mart brand.

A source close to Wal-Mart told WWD that
the key is more color, "They
sell a lot of goods to mainstream [shoppers]. Their customer is not the fashion
elite." The key to Wal-Mart’s apparel strategy, said the source, "is
to take basics and give them more color, not think about acquiring brands."

Still,
Suzanne Hader, principal at 400Twinconsulting, argued that Wal-Mart needs
to explain the benefits of shopping for apparel alongside groceries, and that
might only be possible through branded partnerships.

"Wal-Mart could do low-priced, totally affordable basics in a lot of colors
and shapes in a vast range of sizes," said Suzanne Hader, principal at
400Twinconsulting. "They
could occupy that space, but what story would they tell around that? Wal-Mart’s
story always defaults to price. With apparel, you need more."

Discussion Questions: Why do you think Wal-Mart has struggled in its apparel
business? How important is it for Wal-Mart to make fashion apparel work in
its stores?

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18 Comments on "Wal-Mart’s Apparel Project"


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David Biernbaum
Guest
10 years 11 months ago

A few theories about why Walmart struggles with its apparel projects:

1. Stigma. This is probably not as much an issue in other departments as it might still be in apparel.

2. The pricing objectives at Walmart might not allow for the quality that some shoppers are seeking, even in a mass merchandiser environment.

3. Ease in trying on, getting assistance, and purchasing.

Susan Rider
Guest
Susan Rider
10 years 11 months ago

Wal-Mart has struggled because they are not sure what they want to be…fashion, staples, variety, etc. Part of the problem is that early on as the low-cost provider, the clothing was poor; quality cheap. Changing that perception over time has become a challenge. They also don’t seem to follow the latest trends…they are too late in getting to the market. Trendy, low cost, quality goods are what shoppers are looking for, all rolled into one.

Gene Hoffman
Guest
Gene Hoffman
10 years 11 months ago

Walk into a Wal-Mart behind 150 customers and you could easily conclude this is not the place for fabulous fashions.

Price is price and its hold captive all ardent admirers. Fashion is fashion and tends to discriminate against the untidy.

Paula Rosenblum
Guest
10 years 11 months ago

Dare I say it? It’s just like Sears. The company’s not good at it–they want it because it turns reasonably quickly and has nice margins–so Walmart keeps trying again.

But it’s not the right place to buy apparel. Walmart can’t have it both ways. It can’t be the low price provider AND fashion-forward. Sears can’t do it, and neither can Walmart. Not gonna happen.

Art Williams
Guest
Art Williams
10 years 11 months ago

Wal-Mart selling clothes reminds me of Menards selling groceries; a complete misfit. Wal-Mart is all about their low-price image, and that is a conflict with what most people are looking for in clothing. They want to save money on quality items, but not buy “cheap” clothes. Wal-Mart is competing with the thrift shops when it comes to their clothing image.

Joel Warady
Guest
Joel Warady
10 years 11 months ago

You can’t be all things to all people. It is difficult for people to think about going to Walmart for apparel when it is also where they get their 10W 30 oil. As well, many of Walmart customers are on the lower rung of the income ladder. When this group wants to purchase nice apparel, there is a definite stigma attached to the Walmart label. They will want to “purchase up” for their nice clothing, and Walmart is not that solution.

Walmart is smart to focus on the basics, underwear, socks, t-shirts, sports apparel, etc. These categories are less fashion driven, more price driven, and this is where Walmart excels.

Better to be great at what you are, than mediocre at what you aren’t.

Charles P. Walsh
Guest
Charles P. Walsh
10 years 11 months ago
Apparel sales are important to Walmart for a couple obvious reasons; 1) margin and 2) meeting customers needs. The question clearly isn’t “should Walmart sell apparel and can they be successful?” They should sell apparel and they have been selling apparel and a whole lot of it; around $40 billion dollars worth. The real question, in my opinion, is whether they are focusing on the right product and the right customer. The old argument of whether shoppers trust apparel at Walmart is simply too broad in its approach. Walmart’s core customer base wants to buy many of its apparel needs at Walmart and has been doing so for many, many years. The real crux of the issue is about Walmart’s desire to sell “fashionable” clothes in their stores and to attract that ever elusive “upper income” customer. Walmart’s approach to apparel is consistent with their overall approach to merchandising under John Flemming, with an emphasis on an overall attempt to upscale the assortment and improve their image in order to gain market share with that… Read more »
Ed Rosenbaum
Guest
10 years 11 months ago

I am taking an opposing position here. I believe one of the next major pushes Walmart will and has to make is getting in more designer apparel. It worked for Target. It worked for Kmart. Why not? Walmart enjoys the competitive battle, especially when they can “crush” the opponent.

The apparel field is one they have done poorly over the years. No, that is not their business model but neither was such major expansion and growth to this international stage part of Sam Walton’s, either. So now they are in the game so to speak. They have to and will find a celebrity designer who will appeal to adult buyers such as Jaclyn Smith did for Kmart.

I am not referring to a Miley Cyrus with limited appeal only to a younger buyer. I am referring to a celebrity who will bring in the adult consumer and their children. I can not see Walmart staying out of this huge buying market.

Ted Hurlbut
Guest
Ted Hurlbut
10 years 11 months ago

The Walmart customer is not a fashion-driven customer. They’re a price-driven customer. Their wardrobe is made up primarily of basics, and when they need something more fashionable, they’re likely to look somewhere other than Walmart.

To quote a famous football coach, you are what you are. Walmart has succeeded because they are simply the best at what they are.

Bill Emerson
Guest
Bill Emerson
10 years 11 months ago

OK, so I’m a little confused. At $40 billion, Wal-Mart does more apparel business than Macy’s and Kohl’s COMBINED. I’m not sure what all the fuss is about.

Brad Ellman
Guest
Brad Ellman
10 years 11 months ago

There are a lot of reasons big and small that keep WM from getting done what it needs to do in apparel. One area that I can speak to is their brand identity development and customer focus. I do not see the consistency of brand and design elements necessary for a private label success.

I don’t believe that their fashion focus should be dictated by the same parameters as the 7th Avenue set but as a packaging designer and developer, I would like to see them go in some other directions to embrace their unique customer segments more fully.

Michael Boze
Guest
Michael Boze
10 years 11 months ago

Wal-Mart will struggle trying to sell clothing at the same efficiency as a department sore. The issue raised about selling more dollars may well be a fact but Wal-Mart would die for the margin turnover and sales per square foot metrics of traditional apparel retailers.

The notion of a fashion apparel in Wal-Mart may be a mis-statement. They need to focus on what their customers wear. A strong work wear and uniform business backed up by a strong denim and separates business with screen prints & fleece business should be the cornerstone of there men’s and women’s business. A value-based kids business will also drive traffic that will benefit the men’s and women’s business. Do that well and they can grow from there.

What they can take from the department stores apparel business is merchandise presentation because the farm and feed stores do such a poor job.

I see a great private-label opportunity here.

Craig Sundstrom
Guest
10 years 11 months ago

I am of two minds in answering this question: part of me wants to simply nod in agreement with Bill (and I think he astutely points out we need to be careful in defining what “struggling” means when we talk about WM); but the other part realizes that if it is to continue to grow, it will (likely) have to grow in areas it isn’t strong in now (fashion goods being one of them).

As to why it hasn’t done particularly well in this so far is amply illustrated in both the article and the comments–namely that “fashion” is the antitheses of what WM is all about–but how (or even “if”) this can be remedied is unclear.

Joan Treistman
Guest
10 years 11 months ago

We don’t know the “why” behind Wal-Mart’s effort to provide and sell fashion apparel. Undoubtedly, they are not satisfied with their current revenue stream and think fashion has an incremental benefit. But the next question is, what happens to the existing business when fashion is the new positioning?

I agree with those who say you can’t be all things to all people and that Wal-Mart must establish a place in their competitive landscape that truly identifies the retail experience they want to promote. Once they take two steps forward, one step back and then start again, customers will be confused and bypass the products that can’t be quickly defined in relation to other Wal-Mart purchases.

Carol Spieckerman
Guest
10 years 11 months ago
Walmart is stuck in a neither fish nor fowl situation in apparel. On one side, you have Macy’s and J.C. Penney maniacally going after private and proprietary brands. On the other side sit fast, nimble, and vertical H&M, Zara, Uniqlo (Walmart is lucky that Uniqlo hasn’t gotten serious about peppering its stores from sea to shining sea) and Mango (yikes, coming to a J.C. Penney as a shop-in-shop any month now). Plopped in the middle is still-vulnerable Target with its fun capsule collections and “the rest” (a terribly unexciting mishmash of private and proprietary brands). Walmart lacks a singular vision and would do well to bring in the apparel equivalent of Carmen Bauza. Not satisfied with Walmart beauty as an accidental cash cow run by brands, Ms. Bauza has completely restructured Walmart’s existing brands into a cohesive and pared-down story while selectively pursuing up-market brand opportunities (Hard Candy). You’ll know which stores reflect her handy work the minute you walk into the beauty area. A complete transformation. Personally, I think that Walmart should have given… Read more »
Mark Burr
Guest
10 years 11 months ago

Even if they had an incredible celebrity label, it would still mean that it came from Wal-Mart…wouldn’t it?

Not that fashion coming from Wal-Mart is a problem. But I think it is the problem. Fashion, chic, and Wal-Mart just don’t seem to belong in the same sentence. It may however, be the death sentence for the brand that they may be able to lure.

Why is this true to this area versus most all other areas of the store? I can’t really answer that, but I think it is true. Therein lies the problem. Fashion has more to do with thought than most products. It’s a ‘perception’ thing. In fashion, it seems to me that it’s all about ‘perception’. Perception once set is a battle that is never easily won if possible to ever win–at least for this product.

Michael Baker
Guest
Michael Baker
10 years 11 months ago

I live in Australia but every time I go to America and walk into a Wal-Mart I see a lot of very obese people who don’t appear to have a lot of income. Are these really the kind of people who are going to be fashion-conscious?

Wal-Mart has been trying to do better with apparel for a long time. Its “George” label was going to be the big game-changer, but I took a close look at George and I simply don’t think it’s any good. In fact I have some less generous words for it. I think Wal-Mart should give up on this and stick to what it’s good at. That doesn’t mean it can’t sell a lot of clothes, but they’re going to be plus-sized clothes for a very undiscerning customer.

John Crossman
Guest
John Crossman
10 years 10 months ago

I think it may help to break out clothes from fashion. When it comes to selling clothes, Wal-Mart is very successful. When it comes to fashion, well, I don’t see Wal-Mart competing.

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