Walmart is building an e-commerce ecosystem

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Walmart is building an e-commerce ecosystem

By Mike Troy - 11/14/2017
Lord & Taylor's Fifth Avenue flagship store in New York has a 30,000-sq.-ft. dress shop that will be accessible to visitors to Walmart.com in 2018.

Walmart took a major step toward applying platform thinking to its e-commerce efforts by doing a deal with Lord & Taylor to create a flagship store on Walmart.com.

The agreement solves a problem for both companies. Walmart gains credibility for its apparel, footwear and accessories efforts by partnering with a department store brand that has a reputation for quality. Lord & Taylor gains exposure to a massive online shopper universe at a time when it and the department store channel overall are struggling.

“Our goal is to create a premium fashion destination on Walmart.com,” said Denise Incandela, head of fashion for Walmart U.S. eCommerce. “We see customers on our site searching for higher-end items, and we are expanding our business online to focus on adding specialized and premium shopping experiences, starting with fashion.”

The deal doesn’t take effect until next spring when Lord & Taylor will have a dedicated store on Walmart.com and the Walmart app as part of an effort Incandela described as creating the new Walmart.com which features elements of discovery and inspiration.

“As retail continues to change, this flagship store creates enormous growth opportunities for Lord & Taylor and our brand partners,” said Liz Rodbell, President of Lord & Taylor. “Our customers trust us to deliver high-quality fashion apparel and accessories, and we will soon be able to extend the reach of that offering to new customers through this flagship store. Walmart.com is a shopping destination that reaches a wide base of customers looking for premium fashion brands. They are a great company for us to work with as we continue to grow our digital presence.”

The addition of Lord & Taylor with a dedicated store on Walmart.com resembles the platform approach taken by Alibaba’s Tmall marketplace which allows brands and retailers to establish flagship stores similar to how tenants lease space in a shopping center. It is a concept Walmart could replicate with other besides Lord & Taylor as it looks to rival Amazon as a destination where shoppers begin product searches.

From Lord & Taylor’s standpoint, the deal with Walmart highlights just how far the department store channel has fallen. For much of its history Lord & Taylor was synonymous with upscale luxury similar to Nieman Marcus. However, it has been on a roller coaster for much of the past three decades with the brand regularly changing ownership, coping with challenging conditions and never able to muster meaningful growth.

Lord & Taylor was acquired by May Department Stores in 1986 and later merger with Federated Department stores which had acquired Macy’s. In 2006, Lord & Taylor was acquired by NRDC Equity Partners. A few years later NRDC acquired The Hudson’s Bay Company. The company was taken public in 2012 and in 2013 acquired Saks, Inc. More recently, Lord & Taylor sold its headquarters on Fifth Avenue in New York to WeWork Property Advisors for $850 million. The company is also in the midst of a leadership transition following the departure of CEO Gerry Storch last month.