By Jordyn Holman
It felt like calculated chaos inside the chilly convention center where Walmart had re-created one of its Supercenter stores. It was late August in Orlando, Florida, and the retailer had flown in thousands of workers to have a look. They were zipping around, trying to take it all in.
There were dozens of lit-up Christmas trees and poinsettias, rows of Halloween candy, and racks of knit dresses and sweaters. A Minnie Mouse mascot danced around the toy section, while wacky inflatable ghosts and foxes hovered above the inflatable jack-o’-lanterns in a pumpkin patch. Along the way, Walmart workers were chowing down on samples of pulled pork and chips, Oreo cookies and ice cream.
A candy cane door frame welcomed people to the North Pole — and into Walmart’s annual business meeting for the holiday shopping season.
On that sweltering day, the nation’s largest retailer was trying to set the mood for holidays that were still months off. But foremost on the agenda for the 6,700 attendees was Walmart’s slate of fall and winter events.
Beyond the festive mood, the holiday season is full of high stakes. It’s the busiest quarter of the year for most retailers, and Walmart’s preparations offer insights into consumer behavior and the state of the retail industry.
Holiday sales are expected to increase this year at a slower rate than last year, according to the National Retail Federation. But that estimate includes only November and December. The holiday season no longer encompasses solely what’s purchased for Thanksgiving and Christmas, but also includes sales for the football tailgating season and Halloween.
Jen Acerra, who leads the consumer insights team at Walmart, helps the company gauge how shoppers are likely to be feeling throughout the fall and into winter. Last year, Acerra said, the retailer began to see people really starting their holiday shopping “with gusto” before Halloween.
“We’re going with it,” she said.
That shift has forced Walmart, and many other retailers, to think about what customers are willing to purchase over a longer timeline. And figuring out what shoppers want this year is proving challenging. Economists and retail analysts say consumer apprehension is hanging over holiday spending prospects — compounded, early on, by uncertainty about what the election will bring. Retailers also note that there are five fewer shopping days than last year between Thanksgiving and Christmas.
“It’s just going to put a lot more pressure on the holiday season,” said Kate McShane, managing director at Goldman Sachs, who follows major retailers.
But if done correctly, a holiday quarter that drives people to a company’s stores and e-commerce channels can bode well for the entire year ahead.
“If a customer has a great holiday experience and is able to find the hot toy with similar prices as last year, or it felt like they saved a couple of bucks, that’s going to cement the loyalty,” said David Silverman, retail analyst at Fitch Ratings.
So far, Walmart executives seem to feel positive, as they have continued to increase sales this year while department store chains like Macy’s and Kohl’s say their customers have pulled back. In part, Walmart attributes its recent success — U.S. sales were up 4.2% in the second quarter from a year earlier — to its proposition of “everyday low prices” and conveniences like faster shipping times.
“Sentiment affects what we do,” said John Furner, CEO of Walmart’s U.S. business. “Even if sentiment changes, there are still people that are feeling very good, and there are people that are not. So we try to really focus on what we can control” — customer service, hiring and execution.
In the morning, Furner and other top executives gave presentations reminding store managers of their importance and marching orders. The speakers emphasized that the company offered 7,200 rollbacks — the company’s term for discounts — in the second quarter, which was more than in the same time the year before. In the third and fourth quarters this year, the company said, it would have “close to 25% more” rollbacks in the toy department than it had the prior year.
The items often purchased for Thanksgiving dinner would cost about 3% less than the year before. And turkeys would be pre-priced, saving workers the time it would take to weigh each bird and sparing customers from waiting around for the price.
Toys are a major gift-giving category, and Walmart places a particular focus on it. Part of keeping prices low, Furner said, is making sure Walmart’s merchants select items customers are willing to buy at full price, and not having a “bunch of markdowns.”
“Managing these buys a year out like they do is science and art, because you have to try to pick where you think the customer is going to land, and then you’ve got innovation,” he said, standing near the toy aisle in the mock Supercenter. “You’ve got to place your bet, then we hold our breath for about six months. We’re right in the middle of the breath-holding period right now.”
Acerra and her consumer insights team have mapped out the mindset of shoppers during each week of the holiday selling period. Around mid-October, shoppers are starting to look for early deals. Near Thanksgiving, they are feeling stress from getting ready for family gatherings. Then comes Black Friday, the start of the frenzied push to the finish line.
“There also is a little bit of the dread,” Acerra said. “There’s the dread of the long lines to get the product that I want, or the stress of having to work to find what I need with the time that I’ve got. There’s ups and downs that come with it, and we need to be ready for however the customer shows up, whether it’s showing up in our stores, interacting with our associates or when they’re shopping online.”
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