Wal-Mart Stores Inc. is the world’s largest company on revenue as well as the world’s largest private employer with more than 2.3 million employees on its payroll. The company has more than 11,695 stores across 28 countries, with 63 different names. So, the company operates as “Walmart” in the US and Canada. But in Mexico and Central America, the retail giant is known as Walmart de Mexico y Centroamerica. In the UK, it is known as Asda, the Seiyu Group in Japan and Best Price in India.
The retail giant’s number one position has lately been challenged by online retail giant, Amazon.com. The company’s in-store traffic has taken a hit, as have sales and share prices.
In recent months, the giant has taken counter measures to deal with the threat it is facing by online competition. The company is investing more than $2 billion over the next two years to improve its online sales. Walmart is also offering a free-pick up service for groceries ordered online. Company employees are being offered higher salaries as well as incentives for better presentation at stores as well as improved customer service.
The retail giant is now also targeting higher end customers, which is slightly off-beat for a company that has traditionally been seen as the market for low-income consumers. Millennials prefer to shop for more upmarket products, which have not been available in Walmart. This new strategy is targeted at that segment, and, if successful, will open up a whole new market for the retail giant. And this market is the kind that is willing to pay.
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Walmart is now tying up with department store Lord & Taylor in a bid to attract middle- and upper-income customers. Lord & Taylor is the oldest luxury department store in the country and is known for carrying the biggest names in fashion such as Vera Wang, Kate Spade, Polo Ralph Lauren, Badgley Mishka and Armani – just to name a few.
The company will give dedicated space to the luxury department store on its website from spring in 2018.
While Walmart is the world’s largest in-store clothing retailer, with more than $23 billion generated from in-store sales, the company has not managed to replicate their brick-and-mortar success online. Amazon.com continues to be the largest online clothing and foot wear retailer in the US.
The challenge that Walmart faces is that it is perceived to be a low-income store, which puts off the more affluent millennials who like to shop online for big brands. This same reputation has also deterred more upmarket brands from associating themselves with Walmart.
Earlier this year, Walmart already purchased Bonobos, a popular up-market men’s clothing company. Walmart also bought Modcloth, a vintage fashion site as well as Jet.com. These acquisitions were in line with the company’s strategy to attract the more affluent online shoppers to its website.
The deal with Lord & Taylor is a huge breakthrough for Walmart, and will go a long way in helping with the company’s strategy to change consumer perception about the retail giant.
Despite these changes in strategy, Walmart was quick to assure their investors and the market that strategy of targeting high-end customers did not mean that the company would forget about its old customers. Walmart will continue to service the low-income customers as it always has.
The company did warn stakeholders that the re-alignment of company goals means huge dollar investments, which could lead to lower profits in the next year.
However, the company also said that these initial investments and the consequential dollar setbacks would means an more than 60% rise in revenue in 2019.