Wal-Mart (WMT) Takes Another Run At High Fashion

Posted: April 24, 2008 at 5:15 am

There were too many headlines to count when Wal-Mart (WMT) got into the business of selling high-fashion, higher-price clothes a couple of years ago. The number of headlines increased when the project failed.

Wal-Mart has decided to head down that path again, and its failure at the new enterprise is already in the cards. According to The Wall Street Journal "Higher fashion apparel and bedding have higher profit margins than other merchandise — about 31%, a full 10 percentage points higher than almost every other category."

That may be true, and the new clothes may be very, very nice. They are also much more expensive than almost any Wal-Mart shopper can afford. The big chain’s typical customer is relatively poor. Many don’t even keep bank accounts. They come to Wal-Mart to cash their checks. They come because the price of everything from food to drugs to shoes is less expensive than almost everywhere else and the quality is good.

Wal-Mart is launching its new fashion lines into the teeth of a period when many of its customers cannot afford to make their mortgage payments, buy a tank of gas, and keep their families fed. They are certainly not going to buy fancy clothes.

Douglas A. McIntyre

Read more: Retail,
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