Scoop is one of Walmart’s exclusive fashion brands. It has also struck deals with national brands like BCBG Paris.
Melissa Repko | CNBC
SPRINGDALE, Arkansas — Dressed-up mannequins. Eye-catching displays of sleek furniture and colorful swimsuits. And store signs that promote exclusive brands and nationally recognized ones.
Walmart’s redesigned SuperCenter, located just 16 miles from its Northwest Arkansas headquarters, reflects the retailer’s ambitions to get more customers to turn to its stores and website to fill their closets and living rooms, along with their fridges.
It is the retailer’s new model, and it will soon spread across the country. Walmart plans to open 30 more redesigned stores by late January and and hundreds more in the following fiscal year, Chief Merchandising Officer Charles Redfield said.
He said the locations will vary slightly and will have different elements of the pilot store. They’ll be used to test and learn before Walmart rolls out the look more widely, he said.
Walmart is the nation’s largest grocery by revenue, but it wants to drive more sales of higher-margin items such as apparel. Over the past five years, the retailer has launched new brands and struck partnerships with companies like Reebok, Gap and Justice to expand its offerings in apparel, home and other discretionary categories. Those brands have often come with a higher price point and a focus on style. Many are expanding to more of Walmart’s big-box stores.
The retailer’s strategy has taken on more urgency, after Walmart’s first quarter earnings disappointed Wall Street last month and cut profit expectations. Walmart’s mix of merchandise in the period contributed to its earnings miss. As customers spent more on groceries and gas because of inflation, some decided to not buy other, more-profitable items like clothing and TVs — the very purchases that tend to lift profits.
A changing consumer
A pullback on discretionary spending is hitting retailers in general, especially as the companies lap a year-ago period when shoppers had extra dollars from stimulus checks. For Walmart, sales of general merchandise in the U.S. slipped in the first quarter, drawing fewer dollars than the year-ago period even as overall U.S. net sales rose to $96.9 billion, according to Walmart’s filings.
To compound troubles, retailers — including Target, Kohl’s and American Eagle Outfitters — have racked up excess inventory, as consumers snub some popular pandemic items, watch the budget and decide to spend on travel or dining out instead of goods.
Walmart reported that it had excess merchandise, too, with inventory levels up about 33% versus a year earlier. U.S. CEO, John Furner, said last week at an investor day that it will take “a couple of quarters” …….