Walmart is making fashion a priority. The strategy is to pursue niche DTC brands, and primarily those that have appeal for younger, higher-income consumers. According to an Insider article, DTC brands like Harry’s, Casper, Olly, and Quip all chose to debut in big-box retail at Target. Even though Target has a smaller footprint, their customer base is wealthier, and Target focuses on design with dedicated teams for emerging brands.
Unlike Target, Walmart’s image has always been the quintessential everyday lower price model. Because of its focus on products and categories that fit the strategy of high turn, high-volume basics, its systems can only accommodate vendors’ goods that could service that model. And, of course, the young DTC brands cannot. Walmart intends to work with up-and-coming brands to accommodate their size and distribution barriers. And according to Insider, “Walmart is emerging as the go-to retailer for DTC brands expanding into big-box stores.” With those barriers eliminated, emerging brands envision Walmart as “ride rocket ride.” Just a reminder, NRF data shows that Walmart is the largest retailer in the U.S. with sales last year of $459.5 billion, while runner-up Amazon delivered $217.8 billion in sales, and Target clocked in at $93.5 billion.
According to Incandela, “We know that the Walmart customer is looking for fashion brands; she’s willing to spend more and we want to make sure we have what she’s looking for.” She then noted, “We should be her preferred fashion destination, especially in these inflationary times when it’s critical that Walmart be focused on the customer and our ability to offer high quality, stylish apparel, and accessories at incredible prices.”
The Walmart Start program was created as a beauty brand accelerator program that sets smaller brands up for success by giving them a chance to launch at Walmart. The program also gives these brands access to invaluable tools like virtual classes, professional mentorships, and activation support. Walmart’s strategy is that on-trend emerging beauty brands will compel younger and higher-income customers to shop in its stores or online. In its launch even though there may be a limited selection, the promise is that these new customers will also spend time shopping around the rest of the store.
The Next-Gen Shopper
Co-founder and managing partner of Selva Ventures, Kiva Dickinson, says, “The reason Walmart is making this concerted effort is to make sure that younger people are in the store and, once they’re in, are incentivized to browse. They have so much more to gain from spending more time in that box. We’ve seen brands do more than $5 million in sales in their first year at Walmart or more than double their DTC sales.”
The race to get on Walmart’s rocket (apologies to Blue Origin) is just beginning. New upscale food, beauty and personal-care brands are entering or expanding. Bubble, a Gen Z skincare brand and DTC razor brand Billie recently entered. Owyn, a vegan-protein shake brand expanded its presence from 1500 stores to 4500 in August. There’s a rush to the Walmart Start program; the 2022 program plans to get five “buzzy” young beauty brands into 1000 to 3500 stores by next year.
Denise Incandela Takes Walmart Fashion to a New Level
I wrote in July Walmart Fashion: No Longer An Oxymoron Walmart Fashion: No Longer an Oxymoron (therobinreport.com) that “As recently as five years ago, I would have said that Walmart fashion is an oxymoron. Denise Incandela joined the value behemoth in 2017 and is now Executive Vice President, Apparel and General Merchandise Private Brands, Walmart U.S. From that moment on, I knew it was the beginning of fashion’s ascendance for Walmart. She has made a remarkable impact on Walmart fashion over the past five years.”
I just interviewed Denise an hour ago in Alvanon’s Tech Fest, an annual conference attended by thousands of fashion industry retailers and brands around the world, along with senior and C-level speakers from each of those industries. My interview with Denise ended the Tech Fest program, and the following is a distillation of our conversation. As you will read, Denise and Walmart Fashion are on the move.
I opened with an overview of Denise’s career and Walmart’s fashion business. She has been widely quoted and in the past, she said three things that really stand out:
- She has always considered herself a “transformational change agent.”
- She felt she had “a keen sense of what was coming down the pike.”
- About joining Walmart, she said it was “an extraordinary opportunity to do something that hadn’t been done before.”
She went into more detail in our conversation: “I’ve always been excited to lead transformational and even innovative opportunities, starting when I joined Saks Fifth Avenue to lead its digital business – when luxury wasn’t yet online – then Ralph to lead its global digital business – to transform an American brand – and now Walmart.” She added, “Walmart has a significant apparel business but was focused on basics and opening price point. There is substantial opportunity for Walmart to expand beyond its core assortment of opening price point to higher AURs – and even fashion – to obtain more of our customers share of closet.”
The Walmart customer is very different than the customer Denise served in prior positions at Ralph Lauren and Saks Fifth Avenue. I asked her how she went from building customer relationships with premium brands to reaching a mass market customer that is price conscious. She responded, “I loved working in luxury, but we only served and impacted the top 1% of this country. The Walmart customer represents America. Millions and millions of people go through our doors every week. It’s an extraordinary privilege and honor to impact America and how it dresses. It’s a completely different scale and feels like a ‘change the world’ opportunity, which is incredibly motivating.” She added, “All women (and men) want to look and feel great, no matter their style or budget. We know that the Walmart customer is looking for fashion brands; she’s willing to spend more and we want to make sure we have what she’s looking for.” She then noted, “We should be her preferred fashion destination, especially in these inflationary times when it’s critical that Walmart be focused on the customer and our ability to offer high quality, stylish apparel, and accessories at incredible prices. This all feels like the culmination of my career.”
Denise’s promotion to EVP of Apparel and Private Brands at Walmart broadened her responsibility beyond eCommerce to include the elevation of fashion in stores as well. I asked her how she brought an overall fashion perspective to Walmart and what are some of the major initiatives that have been part of her strategy.
She responded with an extensive list of initiatives. Here are the highlights:
- Assortment transformation. Walmart added more than 1,000 brands across Walmart.com and physical stores, which includes national and exclusive elevated brands. The national brands include Reebok, Celebrity Pink, Justice, US Polo Assn., Kendall + Kylie, Levi Strauss, Champion, and Jordache. And the elevated brands include Scoop, Free Assembly, Sofia Jeans by Sofia Vergara, Eloquii Elements, Bonobos Fielder, Love & Sports, and Moosejaw.
- Design talent. This includes exclusive partnerships, that advance Walmart’s assortment fashion credibility, featuring Brandon Maxwell (Free Assembly and Scoop), Michelle Smith and Stacey Griffith, (Love & Sports), and Sofia Vergara (Sophia Jeans).
- Shopping experience transformation. Walmart is re-imagining in-store, online, and omni services to improve traffic and conversion
- The store experience. Walmart’s Store of the Future will change the way customers experience fashion in stores. Everything is being reimagined: branded shops, mannequins, new lighting, fixtures, visual merchandisers. In-store creative will showcase national brands and RFID technology in stores will deliver better on-hand accuracy.
- Online experience. The overhauled online experience includes 360 Spin and Fit Predictor technology, and the game-changing virtual try-on technology, Choose My Model. And today during our conversation, Walmart announced the next phase of their personalized virtual try-on technology with Be Your Own Model, an industry leading technology that brings the in-store fitting room experience to online shoppers.
- Omni experience. Customers can buy online and pick up or ship from store.
- Marketing and creative transformation. Shoppers will experience new imagery, be advised by influencers, and Walmart will run ads in Vogue.
So, although Denise entered Walmart prior to the Walmart Start program, her initiatives are designed to amplify the appeal to younger and higher-income consumers. She has already made her mark on this venerable retail giant convincing the C-suite that they could, in fact, up their game and elevate their image. She said in a CNBC interview, “We’re at the beginning of the journey, we have a lot of work to do.” And I’m sure she will not only do the work but exceed our expectations.