The coronavirus pandemic did a number on retailers. And now, many are eager to capitalize on the back-to-school shopping season that's currently in full swing.
Walmart (NYSE: WMT) didn't experience the same struggles as many smaller retailers did during the pandemic. Not only was it allowed to stay open throughout the crisis due to being an essential retailer, but the fact that it serves as a one-stop shop with affordable price points has helped it retain a huge customer base.
Still, Walmart, like other retailers, increasingly faces competition from online giant Amazon. And Target, with its ever-expanding product line and in-store shops, also has the potential to take a lot of business away from Walmart.
It's for this reason that a recent partnership with tween brand Justice might serve Walmart very well. Here's what investors need to know.
Appealing to a young demographic
When we think about popular kids' retailers, Walmart doesn't always spring to mind. Though budget-conscious parents might favor Walmart, fashionable preteens may prefer to procure their clothing elsewhere. But recently, Walmart formed a partnership with Justice that's allowing the big-box giant to carry over 140 items from the tween favorite's collection in its stores. These include clothing, accessories, and backpacks, which are available on Walmart.com as well as in 2,400 Walmart stores across the country.
In the coming months, Walmart plans to expand its Justice-branded offerings. Shoes and pet accessories will be available in September, while new Justice products will be offered up seasonally. Best of all, prices for Justice products will stay on the affordable side, making the brand more easily accessible to consumers who don't have a ton of money to spend on children's clothing.
This move is a strategic one for Walmart. This year, back-to-school spending is expected to increase 16% compared to last year, as per a recent survey by Deloitte. Furthermore, parents expect to spend about $612 per child, on average, this year, with more consumers planning to make their purchases at physical stores than online.
A big reason parents may have more spending leeway this year boils down to the recently expanded Child Tax Credit. As part of the American Rescue Plan -- the $1.9 trillion relief bill signed in March 2021 -- the Child Tax Credit is now worth up to $3,600 per child under the age of 6 and up to $3,000 per child aged 6 to 17. Previously, it maxed out at $2,000 per child.
What's also unique about this year's Child Tax Credit is that half of it is being paid in the form of monthly installments, the first of which arrived in July. The timing of those payments should give parents a lot more flexibility on the spending front.
Great news for real estate investors
Walmart's partnership with Justice could work wonders for its stock price, making shareholders extremely happy in the coming months. But just as importantly, it could help the big-box giant grow its customer base and drive more people to its physical stores. And that's great news for real estate investors.
Over the past year, many stores shuttered in the wake of the pandemic, and retailers are increasingly shifting their focus from improving their in-store offerings to beefing up digital sales. If Walmart's latest endeavor is successful, the big-box giant may seek to expand its physical footprint, which would be a great thing for shopping centers with empty retail space to fill.