The Supply Side: Walmart plans to transform home category, double sales by 2030

Walmart is known for groceries and consumables, pharmacy and even more recently doubling down on investments in beauty and fashion, but the home business has plenty of room to grow, according to Senior Vice President Creighton Kiper.

He took over leadership of the expansive home division in August and spoke in Bentonville on Nov. 21 to a group of suppliers about goals to double the business and double its digital presence over the next five years. Kiper admits the goal to double sales is audacious, but he said incremental is not getting it done.

“We have to be transformational,” he said.

Kiper has a track record of leadership in other categories like health and wellness where he helped to grow the Spring Valley and GNC brands to more than $1 billion in annual revenue. He most recently was vice president of beauty where he grew the assortment and improved customer experiences adding celebrity lines and revamping the store layout to more resemble a Sephora or Ulta within the large supercenter.

One major goal of Kiper’s is to shift customer perception and grow Walmart’s authority as a home goods retailer.

“I want people to think home when they think Walmart,” he said, noting it will take work and much collaboration.

Kiper already manages a massive home brand in Mainstays that has a 70% household penetration rate in the U.S. and ranks as the third-largest private brand at Walmart behind Great Value and Equate, according to Numerator.

“Inside Walmart, we are excited about the momentum in the business (and) that perception-changing opportunities exist in home, fashion and beauty. We are known for low prices on food and consumables, but we want to also be seen as a destination for home and fashion,” he said.

Kiper said home is a business where Walmart can deepen its customer relationship beyond the sale of eggs and bread. While those customers are important, he would like to see more shoppers who come to Walmart to browse because they want to, not just because they need cereal for tomorrow’s breakfast.

“I remind my team that when you sell a KitchenAid stand mixer you are also selling the opportunity for a grandmother to pass down a recipe to her granddaughter. Or when you sell a foam mattress, think about how it’s not just a place to sleep, but also where a dad tells bedtime stories to his son or daughter,” Kiper said.

He said home is one of the most fundamental parts of the family. Walmart has to tell the home story that is a lifestyle purchase, while customers may not always be buying products they are using all the time, he noted.

RECENT GAINS
In its recent third-quarter earnings report, Walmart outperformed other competitors in part because of improving general merchandise sales. Chief Financial Officer John David Rainey said during a Nov. 19 earnings call that inflation has “remained close to flat for the past four quarters, with Q3 general merchandise and consumables being deflationary and food inflationary in the low-single digits.”

He said general merchandise sales are rising despite deflation and singled out home and toys as performing well.

“It was nice to see general merchandise grow low-single digits even as prices are deflated by over 4%,” Rainey added.

Walmart said its investments in newness around store modular resets and expanded product assortment are resonating with all income cohorts. Home is also a big category for Walmart’s growing marketplace – a digital space for third-party sellers – as are toys that contributed to more than 20% growth in the recent period with share gains across all household income groups.

Walmart was not the only retailer to report solid results in its home category. TJX-owned HomeGoods posted comp-store sales growth of 3% and overall sales growth of 7% from a year ago, despite deflationary pricing pressures in the category. The HomeGoods results were the best performing U.S. segment of the TJX-owned companies including Marshall’s and TJ Maxx.

Amazon also recently reported its home category sales saw a huge boost during its Prime Day event held in October. The e-tailer said small kitchen appliances took the top spot, recording a 76% increase from a year ago. Kitchenware, cookware and mattresses all recorded double-digit growth. Home office furniture and bedroom furniture experienced more modest increases. Promotional pricing could have been a catalyst for the increased spending on home goods with discounts ranging from 14% to 16% depending on the item.

WHAT’S NEXT
Kiper said he’s particularly excited about the loads of new products in the home category coming to Walmart in the first quarter. He said coming soon will be more collections and staged displays for the holiday cycle. He said digital is important to the success of growing the home business.

“Just being able to scan a barcode in-store is not enough. It needs to feel like a billboard and inspirational. We will remodel around 600 stores over the next year, and that will continue for five years. We want to change how home shows up digitally in stores. Online we have a lot of work to do around emphasizing collections so a shopper can see every room in their home. That’s going to take collaboration among departments but should help us deliver a better experience,” he said.

Kiper also said Walmart is committed to a better relationship with its top brands, focusing on style and quality, and pushing the envelope as far as it can. He said there are some segments where Walmart does not play, but conversations are ongoing about how brands can work together to better serve customers with new products.

“Walmart is a huge food retailer, and we also have relationships with major appliance makers. Don’t be surprised when you hear we are delivering refrigerators from stores. Work is being done,” he said.

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 is sponsored by Firebend.