The Trouble with Walmart's Apparel Strategy
In yet another attempt to give its apparel division a makeover, Walmart (WMT) ousted its U.S. division apparel chief Dottie Mattison. Her replacement, Lisa Rhodes, former chief merchant at the Dress Barn's (BRN) Maurices chain of teen clothing stores, now has the difficult task of how to make Walmart's latest initiative -- focused on ultra-cheap basics -- profitable, while overhauling the retailer's entire ailing apparel strategy.
It isn't going to be easy. And it's going to take more than slapping a bit of bling on some sweatshirts and calling them chic. What it will take? A solid vision and a management plan that won't get sidetracked by trends.
Rhodes and company need to understand one thing tout de suite: Walmart can't go head-to-head with Target (TGT) when it comes to clothing. And it doesn't have to. Target's carefully cultivated designer collaborations are its own personal gravy train -- often imitated, but seldom duplicated by rivals Kohl's (KSS) and Sears (SHDL). By democratizing high-end designers and mass-producing their capsule collections, Target's grown its apparel business to about 20 percent of overall revenue, which helped the retailer post sales gains in a soft economy, a trend that shows no signs of slowing.
By trying the same tactic, Walmart missed the fashion boat by a mile. It's apparel division only accounts for 10 percent of the total business, down from 11 percent last year. An attempt to reinvent with a designer label -- Mark Eisen -- failed in fairly short order, because Walmart's core customer wasn't really shopping for stylish career separates (or worse, slouchy tunics and leggings frosted with plastic crystals and zippers). More fashion faux pas followed, evidenced most recently with racks stuffed with steeply marked down togs for teens courtesy Disney's darling Miley Cyrus.
The latter flopped because while the designs were great (Cyrus was guided by the professional eye and design pen of Max Azria) Walmart cheaped out to spectacular effect. T-shirt fabrics were flimsy, jeans were stiff and scratchy, and (horrors!) the jewelry line was produced with unsafe levels of cadmium.
Walmart can still win at apparel if it pursues its own strengths and doesn't try to copycat Target. Starting with simple basics such as those found in its Hanes' Just My Size assortment, Walmart can build out with more colors, more styles, and sizes, yet maintain the same affordable prices.
Such smart styling could also be applied to women's jeans the way it was in the Junior's Faded Glory line. Mom jeans are OK, but even denizens of the Heartland who spend their days volunteering at school and shuttling teams to soccer practice would appreciate the figure flattery of a (slightly) lower rise and boot cut leg.
And what gal wouldn't be happy to switch her thin (unforgiving) leggings for more substantial "jeggings" and a button-up tunic in cheerful colors. Add ballet flats (available in black, brown and three brights in the shoe department -- hint, hint), merchandise across the aisle from the grocery section and voila -- an entire outfit sold to the lady who just came in for those other basics: milk and bread.
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