Wal-Mart is betting heavily on early deals and e-commerce to help it win the holiday season, and break a streak of six quarters without comparable U.S. sales growth.
Wal-Mart Stores WMT is leaving nothing to chance in a holiday season it needs to win.
The discount retailer is doubling the number of deals it is offering this weekend, in an early kick-off to the holiday shopping season, and planning to make full use of its recent tech investments to keep Amazon.com AMZN , among others, at bay with more options for shipping and order pick up than it has previously offered.
The company, the world’s largest retailer, is coming off of six straight quarters without comparable U.S. sales growth. And with the holiday season shaping up to be ferociously competitive, the retailer is doling out the deals early, rolling back prices on 20,000 items, beginning on Saturday, compared to the more typical 10,000 at this time of year. It has also increased the assortment of merchandise available on its web site by 1 million items to 7 million now.
Wal-Mart, whose stores will be decked out in Christmas decorations by Saturday morning, after a quick post-Halloween changeover, is looking to fend up rivals like Amazon, which is starting its own Black Friday deals a month before the actual day itself, at a time consumers are as price-conscious as ever, something its executives readily acknowledge. (Wal-Mart will announce its Black Friday-specific strategy later.)
The Wal-Mart deals this weekend will emphasize electronics and toys, two of the most competitive categories during a holiday season for any retailer.
“It doesn’t start on Black Friday, it starts right now,” Steve Bratspies, executive vice president of general merchandise for Walmart U.S. told reporters on a holiday strategy briefing. “We’re expecting to see a highly competitive environment throughout the holiday season.”
He’s right. On top of Amazon, Office Depot ODP and OfficeMax are among the retailers already out there early with aggressive deals this weekend. Even indirect competitors, like department stores Macy’s M and Kohl’s, KSS threaten Walmart, as they are opening earlier on Thanksgiving Day this year than last.
But early deals don’t necessarily make the holiday pie bigger—they just change spending habits, warned Marshal Cohen, chief industry analyst at NPD Group.
“Instead, consumers will simply have more time to take advantage of sales,” Cohen added, noting that all this early deal activity “foreshadows a promotional-heavy holiday season,” which might mean retailers may meet their sales forecast, but to the detriment of their profit margins.
Wal-Mart is testing a program that does online prices comparisons with stores like Amazon for potential roll-out this holiday season, according to the Wall Street Journal, although it hasn’t made a decision yet.
Wal-Mart raises its e-commerce game
Wal-Mart is facing a resurgent Target TGT determined to do well this holiday season, after a disastrous data breach right before Christmas killed its holiday quarter last year. Some 20% of Target’s toy offerings this Christmas period will be exclusive, compared to 3% in 2009. And Target, trying to cut into Wal-Mart’s e-commerce lead over it, has just overhauled its website and launched brand new mobile sites. Target will suspend shipping fees on orders less than $50 between Oct. 22 and Dec. 20.
So Wal-Mart is also upping its e-commerce game. On Monday, it is holding a 24-hour holiday cyber-savings event with deals that more typical of Cyber Monday than a plain ol’ Monday in early November. While it has held a similar sale before, Wal-Mart is offering same-day in-store pickup on those items at no extra fee. Wal-Mart is also launching a new app ahead of the holiday season that helps a shopper see if a particular product is available at a given store, along with product reviews. Wal-Mart is also offering free shipping on 100 top gifts, regardless of their price.
These initiatives are part of a multi-year effort by Wal-Mart to fight Amazon by investing heavily in tech, with more to come: at its investor day earlier this month, Wal-Mart said its capital spending on its e-commerce firepower has gone from $400 million last year to $1 billion this year, and further increases next fiscal year. The company gets about 4% of U.S. revenues online, and has acknowledged that needs to grow. (Online sales are rising almost 30% these days)
The company has invested heavily to integrate its stores and e-commerce so it can offer shoppers choices such as the ability to have an item delivered to a store of their choice for pick up, or to be able to comparison shop. The holiday season will be a big test of those efforts.
“There’s a growing consensus that the future of retail is not just in-store or online. The winners in retail will be the ones that can put them together and frankly, we think we’ve done the harder part,” McMillon said at the analyst day.