Toys are a major holiday gift-giving category, and Walmart employees at a Florida event got a sampling of what the retailer plans to highlight this year.
Credit...Todd Anderson for The New York Times

Walmart Holiday Shopping Plans Are Laid Months Before Black Friday

To prepare for ever-longer shopping season, thousands of employees were assembled for a retail jamboree in Florida’s August heat.

by · NY Times

It felt like calculated chaos inside the chilly convention center where Walmart had recreated one of its Supercenter stores. It was late August in Orlando, Fla., 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 and strategy team at Walmart, helps the company gauge how shoppers are likely to be feeling throughout the fall and into winter. Last year, Ms. Acerra said, the retailer began to see people really starting their holiday shopping “with gusto” ahead of 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,” David Silverman, retail analyst at Fitch Ratings, said.

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 percent 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, chief executive 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.

Inside the south concourse of the convention center in Orlando, Mr. Furner crisscrossed his way through the makeshift store, passing signs showcasing Black Friday deals, a bigger-than-life shopping cart display and a bank of checkout registers.

Mr. Furner, who has worked for Walmart for 31 years, pointed out the ways that seasonal merchandise like Christmas trees had evolved to win over millennial and Gen Z shoppers. There are more red and white artificial trees and pink Christmas décor. Along the way, he was often stopped by store managers who asked him for a photograph and gave him updates about sales during the back-to-school season.

These managers, he said, are the key to getting Walmart to close out the year with strong sales.

In the morning, Mr. 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 percent more” rollbacks in the toy department than it had the prior year.

The items often purchased for Thanksgiving dinner would cost about 3 percent 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.

Managers were expected to share what they learned with their workers — those who slice meat in the deli section, restock the shelves and collect the carts in the parking lot.

Latriece Watkins, Walmart’s chief merchandising officer, described how the many parts of the business would need to work together like a band, all in harmony. Her listeners included not only store managers but also employees from Walmart’s supply chain, its e-commerce operation and its international division.

“We all know the holidays, and the back half of the year is our time to win,” Ms. Watkins said.

After the speeches, executives including Mr. Furner and Cedric Clark, executive vice president of store operations, took part in question-and-answer sessions on recent technology and supply chain updates. They also heard concerns like getting a clear estimate on when stores could expect shipments of seasonal merchandise.

“We have a healthy anxiety,” Mr. Clark said. “There’s this scenario when things are going good, we kind of step back to say, you know, what else can we look at?”

Toys are a major gift-giving category, and Walmart places a particular focus on it. Part of keeping prices low, Mr. Furner said, is making sure Walmart’s merchants select items that 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.”

For Brittany Smith, a 20-year Walmart veteran who is vice president of merchandising for toys, the process of selecting featured Christmas toys begins in January. This year, the retailer is again highlighting a collection of products under $25, an acknowledgment that many families are short on cash.

“We know there’s probably going to be maybe inflation, tough times, and so how do we make sure we lean into our core values of having everyday low price?” Ms. Smith said.

Near Ms. Smith’s toy display, managers swung by to take pictures of planograms — the diagrams that show workers where products in the store should be placed. She said some had already asked for more units of certain toys, expecting them to be hits.

Ms. Acerra and her consumer insights team have mapped out the mind-set 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,” Ms. 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.”

Rezarta Mucka, 37, oversees 586 workers as a store manager in Teterboro, N.J. She said the information she had received in Orlando was more of a refresher than groundbreaking news. Still, she said it was valuable to attend and connect with peers, particularly those she had mentored who now manage other stores and are going through their first holiday season.

Seasonal merchandise plays a crucial role at her store beyond immediate purchases, building anticipation among shoppers that could bode well for sales, she said.

“Once they see the transitions happen before the holiday starts, I feel that the customers want to come in more often,” Ms. Mucka, a 16-year Walmart veteran, said. “Just so that they could see what we’re going to have for the holidays and be ready for the holiday when the holiday does arrive.”

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