Can Santa and rollbacks help Walmart win the holidays?
It may be the best time of the year, but for retailers, the holiday season can be a competitive frenzy, with each trying to outdo the other for share of consumers' wallets.
This year, the stakes are even higher, given that consumer spending is forecast to barely budge from a year earlier, according to the National Retail Federation, or NRF. So how is the biggest retailer of them all planning on conquering the holiday season? According to Walmart (WMT) executives, the company's plan depends on a few key strategies: thousands of rollbacks, mobile shopping and in-store Santas.
Walmart will have in-store Santa Clauses for customers to take photos with, although Walmart chief operating officer Judith McKenna said that the Santas will be in many but not all of its 4,800 locations. More importantly, the retailer is focusing on using price rollbacks to lure in consumers rather than short-term "weekend only"-type of sales, as well as beefing up its mobile app to help draw more customers.
The good news, for those anxious to start their holiday shopping, is that Walmart will kick off its holiday sales this coming Sunday. On a conference call to talk about its holiday plans, executives said workers will be clearing out Halloween candy on Saturday in preparation for the holiday kickoff.
"We are focused on being clean, fast and friendly this year," McKenna said. "We worked to simplify our processes. We expect mobile shopping to hit an all-time high this year."
Mobile visits through Walmart's app are expected to hit 210 million hits in November and December, up from 18 million visits two years ago, said Fernando Madeira, president of Walmart.com.
The company said it's focusing on rollbacks this holiday season because they extend for 90 days, allowing customers to see consistent pricing during the holiday season. While executives didn't disclose the exact number of rollbacks, they said there will be "thousands," ranging from baking ingredients to toys. The holiday rollbacks will kick off Sunday.
Walmart may have more to lose than its competitors, given its gloomy outlook provided to investors earlier this month. The company said earnings will slump as much as 12 percent in fiscal 2017, far worse than analysts had expected, because of its investments in ecommerce and providing higher wages to workers.
That's putting on the pressure for Walmart to show growth in its revenue line to justify the higher investments. There's one consumer trend that may be in Walmart's favor: shoppers this holiday season told the NRF that they'll be buying gifts based on price first, and quality of merchandise second.
Yet given that rivals such as Amazon (AMZN) are going after Walmart's hold on low prices, it's not clear whether Walmart will wake up on Christmas morning with gifts or coal in its stocking.