Thursday, 10 August 2017

Strategy: Walmart's latest strategy confirms the death of the American middle class as we know it (WMT, AMZM)

Birchbox has a more aspiration — and expensive — reputation than Walmart.

Walmart is expanding beyond its core customers as the middle class shrinks across the US.

Walmart is getting into aspirational retail — and it says a lot about the American economy.

On Wednesday, Recode reported that online cosmetics subscription service Birchbox has discussed a potential sale to retail giant Walmart.

In recent months, Walmart has purchased several trendy, online retailers, including high-end men's retailer Bonobos, hip fashion brand ModCloth, and outdoor gear retailer Moosejaw.

These brands' wares are a marked departure from the apparel typically sold by the retail giant.

Walmart's reputation for selling inexpensive but unfashionable garb is so well-established that it was the sole retailer placed in the low-price and less-fashionable quadrant in a 2017 investor day presentation by Ascena Retail, Ann Taylor and Lane Bryant's parent company.

ModCloth's dresses cost between $60 and $150, whereas Walmart's dresses are usually priced between $10 and $25. Similarly, Birchbox's best-sellers are in the $20 to $30 range, according to the company's website, while most of Walmart's best-selling makeup cost less than $10.

The addition of more "upscale" merchandise demonstrates the changes that the discount retailer has been forced to grapple with as the number of potential middle-class customers plummets.

Between 2000 and 2014, middle-class populations decreased in 203 of the 229 metropolitan areas reviewed in a Pew Research Center study. While the top 20% of wealthiest Americans' average household income grew by about 60% from 1980 to 2015, the rest of America has significantly lagged behind. The mean income of the bottom 20% only grew 10% in the same time period.

In an economically-divided country, Walmart has tried to win over not only to shoppers looking for extreme discounts, but also to shoppers with more money seeking higher-quality items.

Walmart has been working to increase its sales to more affluent customers for years, especially in e-commerce.

"The nature of e-commerce, the nature of the Neighborhood Markets and other things we're doing to create an opportunity for us to be even more relevant to customers that are at the higher end of the scale," McMillon said at an investor meeting in October 2015, Fortune reported.

The retailer has a long way to go until it catches up with rival Amazon online — especially as the e-commerce giant expands its apparel offerings.

Amazon is expected to surpass Macy's as the biggest seller of apparel in America this year. Amazon has similarly ventured into more high-end fashion, selling products by designers such as Zac Posen and Stuart Weitzman.

from - Nigeria's entertainment & lifestyle platform online

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