Consumers Look Past Wal-Mart for Clothing

Discussion
May 22, 2007

By George Anderson

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?

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26 Comments on "Consumers Look Past Wal-Mart for Clothing"


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Joel Mincey
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Joel Mincey
15 years 1 day ago

Wal-Mart is not very good at merchandising. This coupled with poor quality (i.e. cheap) clothing mixed in with the better quality clothing confuses the shopper.

The better quality merchandise needs to be set apart, in a distinctive manner that makes it easy for the shopper to find.

Wal-Mart should take a page from other clothing retailers display the higher quality items on the aisle, and cheaper items toward the back.

Phillip T. Straniero
Guest
Phillip T. Straniero
15 years 1 day ago

When I go into a Wal-Mart store I continue to get the sense that they are trying to put 30 pounds into a 20-pound bag! The men’s fashion department has a number of issues in my opinion: 1) too much private label or lesser national brands; 2) not enough space for proper merchandising for the items; and 3) a display philosophy where the items are not on rounds or squares but mostly stocked on wall racks that make it difficult to see the offerings or the sizing. I also think they might want to consider making the fitting rooms more convenient to the product locations…in some stores the fitting rooms are quite some distance from the men’s merchandise.

Pradip V. Mehta, P.E.
Guest
Pradip V. Mehta, P.E.
15 years 1 day ago

I do not think there is anything Wal-Mart can do to improve its position when it comes to fashion clothing simply because Wal-Mart, over the years, has created an image of a low price general merchandise store. Wal-Mart would be better off sticking to its core competency, i.e. low price general merchandise. I do not see why any one who is used to shopping for clothing at clothing stores or department stores would want to shop at Wal-Mart for clothing! Clothing is not something one buys while shopping for groceries or light bulbs or shampoo and toothpaste! Clothing shopping is typically destination shopping and consumers do not think of Wal-Mart as a destination when thinking about clothing.

Liz Crawford
Guest
15 years 1 day ago

Well, Wal-Mart has a few choices for turn-around. They could sell name brands cheap, ala TJ Maxx, or they could acquire an already-successful line of clothing that appeals to the crowd they want to target.

Creating a line of clothing from “scratch” as it were, isn’t a viable strategy for Wal-Mart, because fashion isn’t in their DNA.

If you don’t have “it,” buy “it.”

Raymond D. Jones
Guest
Raymond D. Jones
15 years 1 day ago

Shopping for clothes tends to be more of a total experience than buying toothpaste or motor oil. It is more destination driven and suggests more of a treasure hunt mentality.

Wal-Mart is about one-stop convenience and low prices. You might pick up some socks or lipstick while you are there but it is not the first place you would select to look for your new spring wardrobe.

Even though they might try, Wal-Mart can not be all things to all people all the time. Unless they significantly revamp the shopping experience, they should be satisfied with the apparel they sell as a convenience category.

Paula Rosenblum
Guest
15 years 1 day ago

Wal-Mart made a Retail 101 mistake when they went “uptown.” They alienated their existing customer base by going after a more affluent crowd.

High end customers just aren’t going to go there–give it up already.

So what do they need to do? Stop pretending to be Target. Be Wal-Mart…focus on your existing customers, which means focus on price, and slowly introduce more interesting “stuff” into the mix. It is true that the retailer needs the apparel business to improve its overall gross margin (toys, groceries and low-end electronics are not what you would call ‘profit windfall’ merchandise), but the apparel WM sells has to appeal to its core constituency…and be priced very sharply.

Lynn Toler
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Lynn Toler
15 years 1 day ago

Wal-Mart is thought of as offering basic clothing. The more affluent shopper prefers to buy clothing from a store that has a more upscale, eclectic look. This shopper wants something that their friends don’t see in every Wal-Mart store.

Wal-Mart should focus on on a higher-end basic line. Jeans, khakis, basic tees & polo shirts. The affluent consumer would probably buy then and go elsewhere for the accessories.

Wal-Mart needs to get back to Sam’s basic principles to see a lift on sales.

Camille P. Schuster, Ph.D.
Guest
15 years 1 day ago

Wal-Mart has no cachet in terms of fashion or clothes. To have that cachet, stores need to be selective about what is purchased and be trendy regarding colors and styles. Stores that are trendy need to have a fast replenishment supply chain. Wal-Mart’s incredibly efficient supply chain is based upon supplying what their best customers are purchasing and making that available at as many stores as possible.

Finding a trend or fad that can be produced with a long lead time (anything longer than 2 months) and trying to make it appeal to a standard audience flies in the face of Wal-Mart’s organization.

Wal-Mart can do an outstanding job of providing staple clothes. Trendy requires a set of competencies that is different from their current competence. Without an image of fashion and trendiness, those individuals trying o be fashionable do not want to say they purchased the outfit at Wal-Mart, just as the men purchasing suits did not want to say they purchased a suit made by Levi’s.

Gary Braswell
Guest
Gary Braswell
15 years 1 day ago

Consumer awareness is the key to W-M becoming a destination for the fashion buyer. You have only to look at the Target consumer to see marketing is the key. The Target consumer is primarily a young family with fashion conscious tastes. The Target marketing campaign is largely responsible for the current success they are enjoying in the marketplace.

I was looking for a new dress shirt. I usually pay $60 – $80 at a department store to get what I like in make. To my great surprise, I happened to look at the “George” men’s dress shirt and discovered the CMT (cut, make, trim) to be as good if not better than the dress shirts I buy at the department stores. W-M price, $20.00.

That’s the value W-M offers; but it only works if the consumer is aware of it!

Chuck Chadwick
Guest
Chuck Chadwick
15 years 1 day ago

If, indeed, the “people who shop Wal-Mart regularly think of Wal-Mart as the No. 2 or No. 3 place they shop” for clothing, where do these people purchase their clothing?

Ryan Mathews
Guest
15 years 1 day ago

Put me in the “stick to your knitting” camp. Wal-Mart will “get fashion right” when it understands it needs to stock good, durable low cost clothing and leaves the designer stuff to Target.

Li McClelland
Guest
Li McClelland
15 years 1 day ago

Why do so many successful businesses that have found an economic niche, a personality, and a highly successful market for themselves try to change it? Wal-Mart had the smaller towns sewn up and then managed to succeed in suburbia with that formula. Clothing, other than the basics and underwear, are just not something shoppers are ever going to run to Wal-Mart for.

Fashion clothing changes the look of their stores, the cadence of merchandise stocking and turnover, and poses a whole set of size and “returns” issues that toothpaste and cleaning supplies just don’t. Wal-Mart should stick with what has worked so well for them and continue to get better and better at that. Nobody can beat them at their own game unless Wal-Mart loses focus.

Laura Davis-Taylor
Guest
Laura Davis-Taylor
15 years 1 day ago

We make some general comments about what people do and do not want and, in my experience, there is no “one type of customer.” There are certain slices of the female demographic that are willing to buy anytime, anywhere if the items are appealing. As much as I’m not a Wal-Mart shopper, even I have scored some really cute things as they’ve tested the waters with fashion. Would I go there for a wardrobe? Heck no. A little fun something while I’m in there anyway? Sure!

Unfortunately, Wal-Mart’s new fashions have been inconsistent. Unlike Target, sometimes you find things and sometimes you don’t…training me (and others like me) that it’s often not even worth looking because they aren’t committed to serving my tastes.

Carol Spieckerman
Guest
Carol Spieckerman
15 years 1 day ago
Still so much propaganda and misinformation circulating around this issue: The “skinny jeans” myth is my favorite. I looked and looked for those much-maligned skinny jeans and just couldn’t find them anywhere…that’s because they were in very limited distribution! Does anyone remember Target’s downscale past and why were they never accused of “abandoning” their “core customer” when they started getting uppity with programs like Go International? As for lack of marketing support for George M.E.; I guess that multi-page spreads in Vogue and staged fashion events in New York were too coy? The fact is that Target just hasn’t been a target. Much easier to tow the elitist line than to actually visit the stores and note the quality, trend and experience upgrades. I would encourage Wal-Mart to stay the course, not to publicly back-peddle when things don’t take off in one or two seasons, to keep collections in the stores for no more than 90 days, and march on with the store remodels. These things take time. In the meantime, my L.A. and New… Read more »
Nikki Baird
Guest
Nikki Baird
15 years 1 day ago

I think for Wal-Mart, it’s all about shopability. They already have the customers in the store, they just need to make the clothing departments look like an appealing place to shop. As it is, there is way too much merchandise stocked on the floor and the dressing rooms are always trashed and nasty. People can’t find what they like, and even if they do they’re scared to try it on. That makes for a bad clothing experience, no matter how high or low fashion the clothes are.

Mark Lilien
Guest
15 years 1 day ago

It’s very difficult, economically, for Wal-Mart to ignore its apparel volume potential, because apparel has much greater margins (when done well) than most other merchandise. And optimal apparel margins come from private label.

Wal-Mart’s major tactical error is that it seems to go a little too fast. Wal-Mart would be better off doing more research, more pilots, before rolling out so quickly with so much commitment. This should be a multiyear step-by-step series of well-controlled moves. Wal-Mart has systematically built other businesses. They can build their fashion business, too. Human progress does not always occur in a straight line. Setbacks are to be expected.

David Livingston
Guest
15 years 1 day ago

This is a difficult battle and perhaps this is one Wal-Mart should walk away from. When I was a kid in grade school about 40 years ago, some kids made fun of me because I was wearing “Kmart clothes.” I never forgot that and still think about it every time I’m shopping for clothes in a big box store. I was living in one of the poorest counties in Indiana so if wearing Kmart clothes was low class there, I can imagine the cruelty leveled against kids caught wearing Wal-Mart clothes today. No one has a problem with buying underwear and socks at Wal-Mart but I think people do not want to be seen wearing anything in Wal-Mart exclusive brands. Wal-Mart would probably be wasting their time improving their clothing image.

Michael Tesler
Guest
Michael Tesler
15 years 1 day ago

Wal-Mart has become the largest, most successful retailer ever by being the best at delivering basics at consistently low prices….straightforward, no games, EDLP. That is still a winning formula. Why does everyone want to be Target??….let them have the “cachet” and stick to the real prize which is the $$$$$$$$$$$$ and if Wal-Mart gets even more aggressive and more clear about what they are (and what they aren’t) they still have plenty of opportunity for growth and success.

Wal-Mart must get comfortable with the fact that they will never be sexy and they will never be upscale (though they will get business in basics from that segment)…..what they can be is even bigger and more profitable just by keeping their eye on the real prize and letting Target be the sexy but distant #2.

Don Delzell
Guest
Don Delzell
15 years 1 day ago
Merchandising changes, in an institution the size of W-M, with all the attribute strength W-M carries, probably are best introduced in an evolutionary manner, rather than a revolutionary manner. Revolutions are splashy, noisy, and inherently throw out the old to make room for the new. Evolutions take place on a more subtle level, and have completely different metrics for success. Saying W-M can’t be in the fashion business is worse than silly. It’s inherently lazy thinking. Fashion, in and of itself, means nothing without the context of the specific consumer being targeted. Is fashion important to the W-M apparel shopper? Yes. Is it more important than price? No. Is it more important than meeting some minimum expectation for quality? No. Is it more important than wearability (the value proposition of being able to wear something in a multitude of locations and situations)? No. W-M does not merchandise apparel with the same visual appeal and methodology that is found in apparel specialty stores or even upscale department stores. Neither does Target. The strategic redirection of apparel… Read more »
Ed Dennis
Guest
Ed Dennis
15 years 1 day ago

I don’t think Wal-Mart needs to try to stretch its offerings to attract more upscale shoppers. Wal-Mart only needs to do more clothing business with their base. They should be getting at least 60% of the clothing business of their base customers. Moving to 70% of that huge base would be enormous.

You have to look at what the base wants. Reaching for a higher demographic is not catering to the base but a wasted effort on shoppers who are not used to coming into Wal-Mart and certainly won’t make the trip to buy clothing. The old adage of “dance with the one who brung ya!” applies in spades here. Wal-Mart–do a better job with your base and don’t worry about clothing the cheerleaders and debs.

Dave Lueken
Guest
Dave Lueken
15 years 1 day ago

You can’t be all things to all people. You just can’t. Too little, too late IMO. Same story with organics. Price is all they have.

MARK DECKARD
Guest
MARK DECKARD
15 years 1 day ago

True – Wal-Mart could improve the presentation and experience on the floor. And true – there is some of the “Wal-Mart-fall-apart” image of softlines that has dogged them for years.

But false that they won’t get it right eventually with improved core designs, regionally-refined selection, perception of quality, and merchandising execution at the point of sale.

They may not be the #1 top-of-mind destination for softlines purchases, but they are #1 in most frequent visits.

So by taking advantage of HUGE foot traffic, they can beat the #1 softlines destinations to the punch by having great product on the floor and getting the impulse purchase from the shopper that had a certain something in mind but hadn’t yet made it to their destination clothier.

If softlines are about 10% of Wal-Mart’s business, there’s close to $30 billion reasons to keep trying. (Who else out there can claim that volume of softlines business?)

Fashion is fickle. Wal-Mart will find the core of the ever-shifting bell curve and own it.

David Biernbaum
Guest
15 years 1 day ago

While Wal-Mart continues to attempt to build its image and perception as an outlet to buy clothes, it’s significant that Sam’s Clubs have already accomplished this turn-around during the past several years. Sam’s has become a noteworthy source for consumers to purchase good value on name brands, for example in men’s brands, including Calvin Klein, Ralph Lauren, Nautica, and others. Sam’s will also be helped with its new policy to accept more types of credit cards. Wal-Mart will probably not be far behind in becoming a more prominent player in clothing, probably more so with men, initially, as men’s brands and styles seem more universal and have greater stability.

Dick Seesel
Guest
15 years 1 day ago

Wal-Mart wants to reach out to a slightly more affluent, fashion-aware customer than its core, and rightfully so. They can’t stand idly by while Target and other competitors gain market share in apparel–and while they continue to open or expand stores in more affluent suburbs. Nevertheless, their execution of a valid strategy has been one misstep after another. The slow selling and excess inventory of “George M.E.” is only the latest example. Poor marketing has not created awareness or demand, and now Wal-Mart is dealing with the margin consequences.

Wal-Mart should be focusing first on improving its position in core commodity basics (jeans, khakis, polos and tees, for example) and gaining market share from its most vulnerable competitor–Gap/Old Navy–in the process. It’s premature to worry about how to turn yourself into Target or H&M until you have build a foundation of more credible wardrobe essentials first.

William Passodelis
Guest
14 years 11 months ago
WM MUST tread carefully. It is perfectly understandable that they must improve the drag from clothing dry goods but this is a total conundrum. WM IS Price — as they say — the “Always” Image for their fashion forward items is a “must do” for them to have any real benefit. But the average WM shopper, I do not believe, will ever look to WM as the arbiter of style and new. Targeted offerings for stores in correct demographic areas is Key — and may help to improve movement and sales. They are already doing this I believe. Some who patronize are simply there for the deal on laundry detergent and toilet paper and will never buy clothing from them. Some will try it out. WM needs to try to impact those “try-ers” and those who are strident WM shoppers for everything and introduce to them the potential benefits of looking better and having some degree of trend or fashion style in their wardrobe — but even these people – and perhaps especially these people… Read more »
Anuj Sharma
Guest
Anuj Sharma
14 years 11 months ago

Wall-Mart is famous with mass and they should only focus on the masses. If they try to deviate them self from mass to class the chances are they may lose their base customers, i.e mass, and also the entire focus will be deviated.

Their 85% customers are those who are concerned about prices, so I see no reason for Wal-Mart to change their focus from their strength of 85% to 15%. Keep your focus on 85%, give them more at reasonable prices. Then see how your business grows.

In case Wal-Mart is serious about catering to class then they should come up with new chain of stores by the name of Wal-Mart Exclusive and market their new stores for the target customers.

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