Over the years Amazon has built up an expansive marketplace that draws in millions of customers a month, an alluring advantage to many brands feeling the pull back as department stores and specialty retailers reduce their store footprints. As the fate of the mall lies in limbo, brands are looking for new channels of growth that sell direct to consumer.
Last week, The Wall Street Journal reported that the American department store is setting up shop on Walmart’s e-commerce site. For the big-box retailer, the benefit is clear — it's spent the last year acquiring a slew of hip digitally-forward brands such as Jet, Bonobos and Modcloth, that resonate with younger and wealthier customers. Lord & Taylor enjoys a healthy loyalty among luxury shoppers, a market that Walmart — long bent on its promise of "always low prices" — has yet to attract. And there's a reason for that, according to industry experts.
"[Y]ou might ... see expectations of the prices to come down," Kelly-Jo Sands, executive vice president of marketing technology at marketing firm Ansira, told Retail Dive. "From the consumer perspective, if I hear ‘Walmart’ I’m expecting a dress to cost a whole lot less than $90. Their price point would have to come down, the way Target’s designer collections are higher than their normal brands, but not even as high as what Modcloth is getting."
With Lord & Taylor's prices even higher than those found on quirky dress seller Modcloth's website, many analysts are wondering: What's in it for the upscale department store retailer?
Few details have yet to emerge on the potential partnership, but if Walmart can successfully court the mall anchor to join the budding e-commerce platform, others may follow suit. On the topic, the discussion forum RetailWire asked its BrainTrust panel of retail experts the following questions:
Do you think Walmart will recruit other retailers to its web mall like it apparently is doing with Lord & Taylor?
Will Lord & Taylor and Walmart benefit from cooperating with one another?
Here are nine of the most provocative and insightful comments from the discussion. Comments have been edited by Retail Dive for length and clarity.
1. What the heck are they thinking?
Paula Rosenblum, Managing Partner, RSR Research: I know I’ve been quoted on this in an even more public forum, but what the heck are both sides thinking? Where is there any crossover whatsoever between Walmart and Lord & Taylor customers and, if you were Lord & Taylor, is THIS where you’d go prospecting?
2. Challenging Amazon
Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce: It seems that Walmart is being tremendously creative — and hopefully will be successful — with their approach. Walmart will (should) certainly add others to its mall, to all the participants’ benefit (including Walmart). Don’t make the mistake of thinking Walmart is stuck in its original image. It’s the only company I see that can launch (and succeed) in a successful, mass effort to challenge Amazon.
3. Playing catch up to Amazon
Harley Feldman, Co-Founder and CMO, Seeonic Inc: Walmart will recruit other retailers to the growing Walmart Marketplace. It will be similar to the Amazon Marketplace but with the enhanced possibility of delivering other retailers products to a Walmart or their own stores. Since Amazon is really a logistics company, Walmart is moving in parallel to the same effect. This means that it does not matter what sells on their website, only that the product needs to be delivered to the consumer. Both retailers will benefit from this partnership — more eyeballs on Lord & Taylor products, and Walmart having a broader product line on their website.
4. A farfetched idea
Max Goldberg, President, Max Goldberg & Associates: I can understand the desire of Lord & Taylor to attract more visitors and of Walmart to want to take on Amazon, but this alliance seems a bit farfetched. Will Lord & Taylor shoppers really want to be associated with Walmart? While it may drive a few more shoppers, what will it do to the Lord & Taylor brand?
5. Denigrating Lord & Taylor
Phil Masiello, Founder and CEO, Hound Dog Digital Agency: If you throw enough stuff against a wall, something is bound to stick. Is the strategy to just try and get as much stuff on the Walmart.com site with no underlying focus or strategy? Walmart is not a high-fashion lifestyle brand. So this arrangement lacks any sort of cohesion of brands. It denigrates the Lord & Taylor brand and does nothing for Walmart. We shall see how this all turns out.
6. Does anyone shop at Lord & Taylor?
Lee Peterson, EVP Brand, Strategy & Design, WD Partners: Boy, Walmart’s PR machine is getting as good as Amazon’s. Good PR but, in the end, who cares? If we really wanted to shop Lord & Taylor, which is questionable in the first place, who cares how we do it? In Walmart’s mall or a physical one — it doesn’t matter. What matters is, do we want to shop at Lord & Taylor at all?
7. All part of the e-commerce plan
Jon Polin, Cofounder and President, StorePower: With all due respect to Lord & Taylor, I can’t believe they’re the only retailer in Walmart’s sights. It will be interesting to see who else follows. This strategy also starts to illuminate how Walmart will leverage the diverse set of retailers it’s purchased in the past year. While all the industry attention is centered on Amazon, I like Walmart’s innovative moves in e-commerce.
8. Figure out the integration
Kenneth Leung, Retail and Customer Experience Expert: The term "web mall" is kind of misleading … When you buy something on Amazon from another seller, and you are buying from Amazon using Amazon basket and payment, Amazon isn’t "the mall," it is a shopping experience partner.
From reading this article, this is a screen real estate agreement, i.e., you will be redirected to Lord & Taylor’s website and basket to buy their items and a separate basket for Walmart items. I think that’s the weakness for this agreement if the shopping experience isn’t integrated well. Do customers want to be bounced around between websites for checkout?
9. A catch-22
Camille P. Schuster, PhD, President, Global Collaborations, Inc: Walmart finds itself caught in a catch-22. Walmart started with a strong sense of the target consumer and created a slogan that provided a strong image for the brand — low prices always.
Walmart has wanted to expand their target market for a long time. No efforts have succeeded because they do not resonate with the original target market and branding strategy. Now they are partnering with Lord & Taylor to attract a new target market. Success is highly questionable because this retailer does not fit with the original segmentation and branding.