“Get busy livin' or get busy dyin'.” That's the guiding principle espoused by Andy Dufrense in Stephen King's surprisingly touching novella about men in prison, which later became the movie “The Shawshank Redemption.” It also seems to increasingly be a guiding principle for Walmart (NYSE:WMT) as the company looks to make new expansions, including in some wholly unexpected directions.
The Familiar, if New
Not all of Walmart's moves are particularly outlandish. Recent reports suggest that Walmart is working on launching its own line of clothing, a move designed to pull market share from bankrupt clothing operations like JCPenney (NYSE:JCP), as well as operations that have recently hit snags stemming from the coronavirus, like Macy's (NYSE:M) and Kohl's (NYSE:KSS).
The new clothing line is known as “Free Assembly,” and currently features 55 pieces in all ranging from a “structured blazer” for $45 and a “fishtail parka” for $40. Prices on Free Assembly clothing will run from $9 to $45 each piece, so it's clear Walmart is hunting the value shopper, as is commonly the case at Walmart. Some of the items will boast organic cotton, a move which should be helpful to organic cotton producers.
Such a move will doubtless help Walmart; its primary business right now is groceries, which account for just over half of Walmart's sales. Since groceries don't tend to have a great profit margin by themselves, other goods are typically added in, which explains the Walmart strategy well. Clothing, meanwhile, means much higher margins, so the company should get a bump up in profit therein.
Where No Big Box Store Has Gone Before
Walmart isn't just making comparatively safe advances here; it's also making some advances that no big-box retailer with a focus on groceries would ever expect. For instance, it now owns 7.5% of TikTok Global, the newly-minted organization designed to take over TikTok's United States operations.
Some might question the validity of such a maneuver, and not without reason. This isn't even kind of what Walmart's core business is, so why branch off in this strange new direction? There's a good point behind it, though; Walmart is already extremely well-represented in the physical retail market. It, like most every other not-purely-online play, could stand to bolster its online operations. By landing nearly 10% of TikTok in one deal, Walmart gets to take advantage of owning a well-known online video operation.
For those who doubt that TikTok is well-known, consider a few points: by 2018, TikTok had over 660 million total downloads. One TikTok personality, Charli D'Amelio, has 52 million followers and earns between roughly $30,000 and $50,000 per post. There are users, and there is user engagement, which means Walmart now has a ready-made short video platform under its partial control.
This also means the company has access to a wide range of new data-gathering systems, data that most users likely won't notice. Particularly useful will be such points as what's trending, to be used in further product development, and who's on top, to consider possible influencer marketing arrangements with.
That's not all; Walmart has also been working on a line of walk-in healthcare clinics for some time now, a point which may unnerve some, but also may make others intrigued. The early reports suggest that not only are people taking advantage of the service, but they're also coming back for follow-up operations, a point which suggests the Walmart clinic could have some life to it.
Surprisingly Daring
Normally, trying to connect words like “daring” to a company like Walmart would be met with snorts of derisive laughter. There's no doubt, though, that that's just what's going on here. The company bought in on a highly controversial online property—one so controversial that a sitting president was looking to ban it outright—and now has a stake in a company that could reshape its marketing operations at every point from product and price to promotion and placement.
Moreover, Walmart didn't stop there; it's adding new products to lines it's already established, and it's adding entirely new product lines in markets it's never been in before. It increasingly seems to be going for a real-world Amazon (NASDAQ:AMZN) vibe, and it's probably closer than ever to achieving it. Undoubtedly, some customers will find this move a bridge too far, but for everyone who wants one-stop shopping for just about everything, the new moves will only prove welcome
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