Walmart Looks To Upscale Apparel Brands In Attempt To Attract New Customers

Walmart (WMT) is looking to woo more customers to its stores with upscale apparel and home brands that it plans to roll out across its locations nationwide.

One of the first stores to get the refreshed look was a SuperCenter in Arkansas, which will be followed by 30 more redesigned locations in late January and hundreds more in the next fiscal year, Chief Merchandising Officer Charles Redfield told CNBC.

Walmart has added brands such as Scoop and Free Assembly, which offers sundresses, to its stores and websites, as well as the exclusive Sofia Jeans brand from actress Sofia Vergara.

Walmart's home category features the Clea Shearer and Joanna Teplin collections from the Netflix show “The Home Edit.” These brands are in addition to partnerships it has made with companies such as Justice, Gap, and Reebok.

The new strategy from Walmart comes after a disappointing first-quarter 2023 earnings report in May, as the retail giant announced total revenue of $141.6 billion, up 2.4%, and cut its profit expectations going forward. U.S. comparable sales grew 3% for the quarter on a two-year stack, while e-commerce sales were up 1%, the company said.

As consumers pull back on discretionary spending due to inflation, retailers are having to get creative to get the attention of shoppers. Adding to their retail woes is a backlog of inventory by consumers changing their spending habits as pandemic restrictions eased.

Walmart also said it had built up inventory -- about 33% more than a year earlier, according to U.S. CEO John Furner. During the company’s investor day last week, he said it would take “a couple of quarters” to get the retailer back where it wants to be, according to CNBC. He added that Walmart would like to “just wish away” about 20% of the excess merchandise.

In previous years, about 32% of Walmart’s net U.S. sales have come from general merchandise, dropping to 28% in Q1 2023. Walmart is looking to increase that percentage by adding a variety of higher-end brands.

While Walmart is pivoting to exclusive brands, it will still offer its entry-level priced offerings for customers on a tight budget, which CEO Doug McMillon can also draw in customers that have more money to spend, CNBC reported.

“As you move up the income scale, how many of those customers can you attract in the areas you might not have been doing business with them as frequently?” he said. “Can we move some volume into apparel and home and maybe even some of the consumable categories as people become even more value-conscious?”

As of Monday at 9:57 a.m. ET, shares of Walmart were trading at $121.05.