Fashion has long been one of the many big businesses at brick-and-mortar giant Walmart Inc., playing a supporting role to the mass merchant’s mammoth food business.
But apparel is now front and center in what’s become the retailer’s next big growth vector — e-commerce.
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When John David Rainey, executive vice president and chief financial officer, appeared at the Morgan Stanley Global Consumer and Retail Conference on Wednesday, the first question was about the online operation.
“E-commerce has been one of the real shining points of our business,” Rainey said.
While Walmart U.S.’ sales rose 4.4 percent to $109 billion in the third quarter, e-commerce posted growth of 24 percent. And the associated advertising business, which sells exposure to brands using the company’s platform, grew 26 percent.
“What’s different about Walmart today versus maybe a few years back is that our value proposition stands,” Rainey said. “It’s much more than just prices or value. It’s also convenience. We see that in customer behavior. We see it in customer surveys. And probably the most telling point around this is what we’ve seen in online pickup and delivery, which is the single largest component of our e-commerce growth.”
While many companies saw online sales growth peak during the pandemic and then slow back down, the CFO said Walmart has held onto its accelerated growth rate.
“In many ways, we are just serving the customer [the way] they want to be served,” he said. “We’ve been known for being a brick-and-mortar retailer, we’ve done that well for 60 years, but we are punching below our weight in the e-commerce space.”
Walmart has successfully torn a page from Amazon’s playbook and is selling not only inventory it buys, but providing a marketplace platform that other brands can also sell on to take advantage of the company’s scale and traffic.
“Marketplace is really exciting for us because we’ve been primarily a first-party retailer for our history,” Rainey said. “And with our marketplace that enables us to start selling additional assortment, additional merchandise. We have roughly 400 million items on our marketplace today, half of those are apparel.
“These are items that you traditionally can’t get in a Walmart store,” he said. “And so it opens us up to a lot more customers wanting to shop us. The economics around that are also different in terms of the [profit and loss] structure. But with more customers coming to our marketplace, we’ve got more eyeballs coming to look at us, you’ve got more advertisers that are willing to spend their money there.”
The potential of that virtuous cycle puts fashion on the cutting edge at Walmart just as the company becomes increasingly competitive with Amazon and as Shein looks to expand its low-price, quick-turn business.
It’s a push that mirrors the efforts made to spruce up the apparel offering in Walmart’s stores as well.
The budget battle for the heart and soul of the fashion customer isn’t starting — it is well underway.
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