At first glance, Walmart (NYSE: WMT) reads like a dominating force in retail. The big-box giant operates over 11,400 stores globally and employs over 2.3 million across the world.
But Walmart didn't have the killer fourth quarter Wall Street expected it to. And given the way consumers flocked to essential retailers during the pandemic, that's surprising.
In a recently leaked memo, Walmart executives expressed concern over the fact that competition from online giants like Amazon (NASDAQ: AMZN) and other big-box stores would take customers away in the coming years. That could explain why Walmart may, in the near term, adopt different strategies to attract more consumers. And on May 13, the big-box giant announced one such move that could help it draw in fashion-minded shoppers.
Walmart acquires Zeekit
Walmart is set to acquire Zeekit, a virtual fitting room service that caters to consumers who shop for clothing online. Zeekit will allow customers to virtually sample clothing from Walmart's private labels, as well as the various national brands it carries.
The technology allows customers to either upload photos of themselves or choose different models that represent their height and body type. From there, the technology will show how clothing items will fit to emulate the in-store dressing room experience -- only without consumers having to get in the car and leave the house.
Though Walmart may be known as the superstore that carries everything, currently, it's not the leader in U.S. appeal sales. That would be Amazon, to which Walmart comes in second. By offering consumers a virtual dressing room, Walmart is hoping to overtake Amazon on the apparel front and capitalize on the ever-growing online shopping boom.
In its fourth-quarter earnings report, Walmart's online sales grew by an impressive 69%. The hope is that investing in Zeekit will play on that trend and help apparel sales soar even more.
The impact on real estate
Right now, Walmart serves as an anchor tenant for shopping centers across the country, and losing even a handful of locations would be brutal. While Walmart may be upping its online shopping game, there's no reason to think the retail giant will be shuttering locations in the near term.
In fact, retailers across the board really need to ride out the post-pandemic shopping wave and see how consumer patterns trend in an age when coronavirus is less of a threat. While many people may seek to continue shopping online, others may rush back to stores once their safety concerns have waned, as well as mask-wearing no longer needs to be part of the picture. (The CDC has already changed its tune on mask-wearing, stating that the fully vaccinated can ditch face coverings indoors, though individual retailers will need to decide what rules to enforce).
The Millionacres bottom line
If Walmart's online apparel sales pick up, it'll only drive more revenue into a business that's already thriving despite a somewhat disappointing recent quarter. As such, real estate investors should consider this latest development a positive one. The reality is that Walmart sells far more than just apparel, so the likelihood of it shuttering stores to focus on digital clothing order fulfillment is pretty low, even if Zeekit does the job Walmart hopes it will do.