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?