Lord & Taylor's web site.

Walmart.com, after expanding to 60 million items from 20 million in the past year, is hungry for greater growth online and is tapping Lord & Taylor as a source for “premium” fashion.

On Monday, the companies said walmart.com will launch a “flagship” Lord & Taylor store online in the spring, confirming reports last month of an impending partnership.

The deal is geared to elevate Wal-Mart’s fashion offering online and is also believed to be an initial step in evolving walmart.com into an online mall, with a variety of brands and stores representing higher quality offerings to compete against Amazon, among other web sites. Wal-Mart’s past attempts to project a fashion image have largely been unsuccessful.

For Lord & Taylor, partnering with Wal-Mart is an opportunity to broaden its exposure around the U.S. and generate greater volume. L&T is a regional retailer with a limited footprint in the Northeast. Its square footage will shrink with the downsizing of the Fifth Avenue flagship after the 2018 holiday season, from 650,000 square feet (gross) to 150,000 square feet, but parent Hudson’s Bay Co. believes there’s plenty of opportunity to grow L&T online.

Richard Baker, executive chairman, governor and interim chief executive officer of Hudson’s Bay Co., said “Lord & Taylor has always suffered the problems of being a regional department store player. Basically, what we are doing is taking America’s oldest department store and bolting it onto Wal-Mart’s infrastructure to turn Lord & Taylor into a national retailer without all the costs associated with a national brick and mortar presence.”

Baker acknowledged the channel will require a buildup of inventories, noting that Lord & Taylor will own the inventory. “This is a huge growth opportunity for both us and our brand partners. Lord & Taylor is one of the few department stores growing in a landscape of shrinking department stores.”

Some brands on the Lord & Taylor matrix will choose to be on walmart.com, while others might not. Regarding getting vendors on board with the program, Baker said, “We are working with our brand partners. This will be a quintessential Lord & Taylor flagship store at walmart.com. Every vendor we do any business with is always in control of their channel and distribution.”

Asked why the group didn’t put another HBC-owned retailer on walmart.com, such as Saks Fifth Avenue, Baker replied, “There is a tremendous opportunity for premium product, not luxury product, within the existing walmart.com business.”

“Our goal is to create a premium fashion destination within Wal-Mart, starting with fashion. Our customers clearly have an interest in high-end items,” said Denise Incandela,  senior vice president of fashion for Wal-Mart’s U.S. e-commerce sites, which include Walmart.com, Jet.com and Shoes.com.

“This is not just a link,” Incandela added. “We will be building it out as specialized experience that will embody the Lord & Taylor flagship.”

“Lord & Taylor is a company of firsts,” said Liz Rodbell, the retailer’s president, who was also interviewed Monday. “We were the first with personal shopping. We had the first female department store president (Dorothy Shaver.) Now we are the first department store to partner with the country’s largest retailer. This is such a pivotal move. This really takes our digital footprint to an unparalleled level of new customers.”

The executives said it was too early to provide specifics on how Lord & Taylor will appear, saying the project is evolving. Details on the look of L&T on walmart.com and its assortment will be divulged at a later date. Rodbell did say the visuals will be commensurate with what’s seen on LordandTaylor.com.

Among the high-end labels on LordandTaylor.com are Ralph Lauren, Vince Camuto, Theory and Calvin Klein.

Incandela said she intends to build walmart.com into a fashion destination with a range “from everyday value, to premium fashion.” With high-end fashion, “We know that there is an interest there. Our customers have told us that,” said Incandela.

She also said Walmart has established a long-term relationship with Lord & Taylor. While Wal-Mart could have approached any number of retailers to enhance its website, Incandela said Lord & Taylor has “strong brand relations and fashion expertise.”

The deal with Lord & Taylor reflects Walmart’s efforts to add “elements of discovery and inspiration,” Incandela added.

Wal-Mart, said Rodbell, “creates enormous growth opportunities for Lord & Taylor and our brand partners.” It remains to be seen which brands sold at Lord & Taylor will make the leap to Walmart.com.

Founded in 1826, Lord & Taylor is the oldest department store in the U.S. and is a division of the Hudson’s Bay Co. Lord & Taylor operates 50 full-line locations, primarily in the Northeast and mid-Atlantic U.S., and lordandtaylor.com.

As reported, after the Lord & Taylor flagship is downsized, most of the building will serve as the New York headquarters for WeWork, which paid $850 million for the site.

Business for several years has been tough at the department store chain, with the flagship long experiencing noticeably weak traffic compared to nearby Macy’s and Saks Fifth Avenue 10 blocks north.

Recently, Richard Baker, governor, executive chairman and interim ceo of HBC, told WWD, “The future of Lord & Taylor is very strong and very exciting.…In today’s retail landscape, Lord & Taylor does not need a big footprint.…Going forward, we will dial up the online offering and experience.”

As reported first in WWD, Incandela joined Wal-Mart Stores Inc. last month after serving as interim ceo of Aerosoles. Earlier, Incandela served as president of Ralph Lauren Global Digital, and before that, she spent more than 14 years at Saks Fifth Avenue in senior roles including executive vice president and president of Saks Direct.


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