The Supply Side: Walmart apparel exec discusses COVID-19 challenges, successes

by Kim Souza ([email protected]) 1,207 views 

Walmart is not known for its apparel business. Despite the ups and downs in the discretionary category, the retail giant is committed to growing sales, according to Deanah Baker, senior vice president of apparel for Walmart U.S.

Baker recently took part in a virtual interview as part of Doing Business in Bentonville’s summer events. Baker said planning around the COVID-19 pandemic has certainly had its challenges.

“No one knows what to expect with demand for back-to-school or holiday, and it differs from store to store. We don’t just need a plan B. We also have a plan J,” Baker said. “Some of the categories I oversee become very discretionary when you don’t have to go somewhere physically, and we have to plan for that as well.”

She said consumer behaviors around back-to-school shopping have changed over the years from a complete stock-up trip 10 years ago to more of a buy-just-in-time mentality that has emerged more recently.

“We have seen blue jean sales move to later in the year as the days get cooler. Imagine what that looks like now with so many kids getting schooling at home this semester,” Baker said.

She also wonders what January and the second semester will look like.

“We have to prepare for that too. Will kids return to classrooms? If so, will they need backpacks and more outerwear?” Baker said. “We have to try to imagine what those needs will look like in every category should kids return to their classrooms and parents go back to offices.”

Baker said families also are looking at desk space for kids, computer electronics for homeschooling and even second printers if parents and kids each have to use them.

Baker said Walmart is working to grow apparel sales, but there have been challenges related to COVID-19. For example, some apparel items are discretionary if people are rarely leaving their homes. Walmart said that after disappointing apparel sales in the first quarter, apparel sales began to bounce back once stimulus checks reached consumers, with mid-single-digit growth in the quarter ending July 31.

Walmart said in the recent earnings call that there could be a pullback in discretionary spending unless another federal stimulus is approved, which provided a return to enhanced unemployment benefits.

Baker said Walmart was able to work with apparel suppliers early in the pandemic to provide personal protective equipment (PPE) in the form of gowns for the Federal Emergency Management Agency (FEMA) at the request of Vice President Mike Pence. She said in working with healthcare company McKesson, Walmart was able to help FEMA source reusable gowns in a matter of days. She said suppliers stepped up and wanted to help, and as a result, the gowns that were made solely in China are also being sourced from El Salvador, Honduras and South Korea.

Baker applauded McKesson’s efforts and other suppliers that rose to the occasion to ensure essential workers had the PPE gowns they needed to remain safer on the job.

Baker said Walmart’s vision for apparel is to provide fashion-forward clothing and accessories at a value in stores and online. She said Walmart continues to add brands with the likes of a jean line from Sofia Vergara and the EV1 collection from Ellen DeGeneres. Walmart also invested in its own private brand apparel launch three years ago with children’s line Wonder Nation, women’s lines Time and Tru and Terra & Sky, and a relaunch of the men’s brand George.

Baker said Walmart continues to add apparel and accessories to same-day pickup online orders, which are fulfilled in stores. That is now limited to baby apparel, basics and backpacks, but she is hoping more items will be added.

She described the pandemic as a marathon, and COVID-19 is going to be a problem for a long time. So her department remains nimble and prepared to pivot when necessary. She also values conversations with suppliers about what is working well during such an unprecedented time.

In January, Walmart CEO Doug McMillon said more work was needed to execute on the general merchandise side of the store. During the holiday season, Walmart’s apparel assortment was too focused on the entry-level prices and Christmas apparel and not enough on more basic styles and “mid-priced” points, McMillon said.

Walmart has struggled to stick to a strategy with its apparel business, according to Scott Benedict, director of retail studies at Texas A&M University and a former Walmart exec. Benedict said Walmart’s execution in grocery is impeccable, and it does quite well in many other categories like baby, pharmacy and, more recently, the home category. But the apparel category is an anomaly for the retail giant.

Walmart has also had a hard time acquiring and retaining fashion talent dating back to 2009 when it moved its fashion office to New York City. In just two years, the business unit returned to Bentonville, and much of the talent remained in New York.

Walmart acquired Jet.com in 2016 and put Marc Lore over its U.S. e-commerce business. By 2020, Walmart discontinued Jet and folded it into Walmart.com. But Lore has been credited with helping grow product inventory and improve user experiences, particularly in the home and apparel categories.

Lore has also been able to add chic brands to the online offering, including reintroducing formerly upscale fashion boutique Scoop as its exclusive brand for fashion-forward customers.

Walmart said the recent restructuring of the U.S. division would consolidate the buying merchants so they oversee in-store and online offerings. McMillon noted earlier this year that apparel and home categories were performing well online, and the retailer needed “more of that.”

While Walmart is one of the largest apparel retailers by sales, its market share online was just 1.9% last year, according to Euromonitor. Amazon held a 50% market share in online apparel sales, while Target’s online share was 1.6%, all of which predated COVID-19.

EDITOR’S NOTE: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.

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