Wal-Mart has been making serious efforts in the past couple of years to become more top-of-mind as a shopping destination for clothing. Unfortunately, while the retailer continues to ring up sales up of white socks and underwear, consumers have not gravitated toward its more fashion-forward offerings.
Wendy Liebmann, president of consulting firm WSL Strategic Retail, told The Wall Street Journal, "People who shop Wal-Mart regularly think of Wal-Mart as the No. 2 or No. 3 place they shop" for clothing.
The problem it appears, at least in part, is that although the company succeeded in developing trendier clothes with labels such as George M.E. (designed by Mark Eisen), it did not know how to market items where price was not the prime factor in consumers' purchasing decisions.
The items designed by Mr. Eisen were relatively pricey for Wal-Mart with a suede jacket selling for $70.
Patricia Edwards, a portfolio manager at financial-services firm Wentworth, Hauser & Violich, told the Journal that Wal-Mart made a splash launching Mr. Eisen's line during Fashion Week in New York last year. Unfortunately, she said, the company did not continue to build on that in the weeks and months that followed.
There were other problems with the George M.E. line, as Wal-Mart brought items for the fall into stores in July instead of August as planned. There was little demand during the early period and product remained on store racks.
Now, Wal-Mart finds itself in a position where it failed to move a lot of merchandise (not just George M.E.) and it needs to clear out inventory. Unsold apparel, according to the Journal, played a part in the 10.3 percent jump in Wal-Mart's inventory levels.
In response, Wal-Mart is taking steps, such as markdowns, to clear its floors of unsold clothing. It has also made the decision to remove Mr. Eisen's line from several hundred of its stores due to a lack of demand.
Fixing the apparel problem is big for Wal-Mart as clothing makes up 10 percent of the chain's revenues, according to a Bank of America estimate.
"When 10 percent of your business is not doing what you want it to, that's a lot of drag," Ms. Edwards said. "It's going to be a drag until they get it right. The question is, when will they get it right?"
Some see hope for Wal-Mart with some adjustments to its marketing for lines including Mr. Eisen's. The chain is also continuing to build new lines such as its Exsto brand of young men's clothing. While distribution of George M.E. was being cut back, Exsto was seeing product increased from 300 stores to 500.
Discussion Questions: What must Wal-Mart do to get fashion right? When do you think the chain will finally accomplish this? What will it mean for other retailers when Wal-Mart finally gets its act together in apparel?