The Supply Side: Walmart seeks to target Gen Z with apparel relaunch

Generation Z, the youngest age demographic of consumers (18 to 27 years), is the first digitally native generation. According to research from SheerID, it represents around 2 billion global consumers and wields $450 billion in spending power.

One metric that separates this younger generation is their insistence on exclusive offers. More than half of Gen Z shoppers feel emotionally connected to the brands they purchase, which builds the loyalty levels Walmart wants. Also, 80% are more likely to buy a brand with an exclusive offer. Likewise, 70% would join a loyalty program to get the exclusive deal, and 93% would share it with others eligible for it, according to SheerID.

Gen Z consumers gravitate to retailers that offer value amid a softening economy. SheerID found that 32% of consumers shop more for lower-cost items, and 42% said they were forced to tighten their budget in late 2023. The two most important criteria for Gen Z consumers are great price and high quality.

Walmart has continued to rank among the top 10 favorite brands of this younger generation in multiple surveys since 2022. Last year, InsideMonkey reported that Gen Z consumers like Walmart because of the value it provides. Numerator reported earlier this year that Walmart had 21% of the Gen Z market share, compared to 10% by Amazon and 8% by Target.

During its recent shareholders week in Bentonville, Walmart execs spoke about using gamification through virtual shopping games, spending on advertising and influencers on TikTok and YouTube, and relaunching a popular teen fashion brand in time for back-to-school shopping.

NO BOUNDARIES
Walmart recently announced a relaunch of its No Boundaries private label brand, which targets young consumers and Gen Z with low prices. No Boundaries first hit Walmart stores 30 years ago, but the retailer said the revamp is geared toward young, fashion-conscious consumers.

Over 80% of products cost $15 or less, with a few T-shirts selling for as low as $5. While the $2 billion brand has been sold for decades, Walmart said the relaunch and refresh should attract more young customers who haven’t considered it before.

As part of the brand refresh, Walmart hired a design team with years of experience creating products for Gen Z consumers. According to the retailer, this is the first time it has dedicated fashion designers to the No Boundaries brand. The move reflects a shift in how it thinks about building and reintroducing a brand that speaks directly to that age group.

“Refreshing our private brand portfolio is critical to our fashion strategy as we evolve our assortment to resonate not only with our core customers but the next generation of Walmart shoppers,” said Jen Jackson Brown, executive over Walmart U.S. fashion brands. “There’s a huge opportunity for Walmart to reach a Gen Z customer with a brand that has both incredible style and unbelievable prices.”

Brown said Walmart has 145 million U.S. consumers shopping in its stores and online each week. She said the refreshed No Boundaries brand is designed and marketed to reach this young adult audience by focusing on fit, quality, style and fabrics.

Walmart said the brand will feature 130 pieces that span women’s clothing and intimates, men’s clothing, shoes and accessories. No Boundaries will be in stores by mid-July. The retailer also said the brand will include sizes from XXS to 5X in young women’s and XS to 3X in young men’s.

To meet Gen Z consumers where they are, Walmart plans to introduce No Boundaries across social media platforms like the immersive social commerce Walmart Discovered experience on Roblox. Walmart said Roblox is one of Gen Z’s most popular platforms. Walmart was the first brand to test real-world commerce on Roblox, which includes No Boundaries. In July, a Roblox creator will help curate a selection of No Boundaries clothes from the forthcoming collection, allowing users to buy items in the brand.

FOREIGN COMPETITION
The apparel relaunch is timely. Walmart and other U.S. retailers face tough competition from foreign-based shopping platforms, such as Temu and Shein, which continue to take fast-fashion market share for bargain shoppers.

Temu is a Chinese-owned shopping platform of a company that was based in the Cayman Islands when Temu launched in the United States in 2022. According to Forbes, Temu’s parent company, PDD Holdings, relocated its headquarters to Dublin in 2023.

According to Bloomberg, it was also the most downloaded app in the U.S. for the last few months of 2022 and has remained there almost every day in 2023. Temu grew its U.S. user base from 5.8 million in October 2022 to more than 82.4 million a year later. Bloomberg reported that 53% of Temu app users were in the U.S. as of May 2023.

YipitData reported that Temu grew its online sales from $2.89 billion at the start of 2023 to more than $12.26 billion by year-end. Consumers Edge reported in January that Singapore-based fast fashion commerce platform Shein has also been a big winner in the U.S., spending 40% of the fast-fashion spending among U.S. consumers. The company, which entered into a deal with Forever 21 in 2023 to process returns, grew U.S. sales by 20% last year.