DALLAS — Wal-Mart shoppers, who number 140 million every week in the U.S. alone, are feeling economic pressure, said Duncan Mac Naughton, chief merchandising and marketing officer of Wal-Mart Stores U.S., speaking at the Texas A&M Retailing Summit here.
“Folks are very tentative today — there’s not any really good news,” he said.
With an average household income of $40,000 or less, Wal-Mart’s customer feels the squeeze of underemployment, which he estimated is in the low teens; gas prices above $3 a gallon, this year’s increase in payroll taxes, and the imminent decrease in SNAP benefits that takes effect Nov. 1.
“The good news is we feel we are very prepared regardless of the economic conditions of the U.S.,” he said.
With 4,100 stores in three formats and nearly $275 billion in revenue last year, the U.S. division of Wal-Mart is working to pare prices to the bone by reducing the costs of everything — “how we load our trucks, how we stock our shelves, how we check people out of the store, how we buy, how we source products, how we negotiate with our supplier partners,” he said.
“We need to lead in price and we watch it everyday,” Mac Naughton said.
In apparel, its focus is basics — 50 percent of sales are jeans, socks, underwear and T-shirts; 40 percent are “fashion basics,” which he jokingly described as “a shirt with a stripe,” and 10 percent are trend.
“Our customer comes to us for fundamental needs in apparel and home,” he said. “We keep to that 50-40-10 formula and we get in less trouble.”
Wal-Mart is realizing good results from this year’s introductions of Ben Hogan golf shirts, Avia sneakers that “single-handedly turned around our shoe department,” Rachael Ray housewares, and men’s activewear by And 1 and Russell, Mac Naughton noted.
“Our activewear business is quite strong,” he said.
The company is ramping up digital media efforts and began posting on Instagram in August. It has 34 million Facebook fans and pushes content through YouTube and Twitter.
The audience applauded when Mac Naughton noted that the company had hired more than 13,000 veterans since Memorial Day, when it guaranteed jobs to all service members with honorable discharges.
Successes in this year’s initiative to source more product in the U.S. include Kayser-Roth underwear and socks, Made Here towels by 1888 Mills and Element televisions, he said.
In another presentation at the conference, Jim Gold, president of specialty retail at Neiman Marcus, was asked which designers impress him.
“It doesn’t matter what age, what country, everyone wants a piece of Chanel and Hermès, more so today than ever before,” Gold responded. He also credited Brunello Cucinelli for becoming one of Neiman’s biggest apparel brands “overnight,” and called Van Cleef & Arpels “the most impressive jewelry company today.”
Moncler, though relatively new to the retailer, is “best of class in the outerwear space,” he said, and Azzedine Alaïa “may be the greatest sportswear designer of our time.”
Gold also praised Tom Ford for quickly racing to “neck and neck with Chanel for the biggest beauty business” and becoming one of the chain’s most successful labels in sunglasses and men’s wear.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
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For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty