Unlikely Alliance: Takeaways From Lord & Taylor's Walmart Deal

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Credit: Walmart

Coming to a Walmart website near you: Lord & Taylor.

In a seemingly unlikely alliance, Walmart is teaming up with the higher-end department store chain next year. The Bentonville, Arkansas-based retailer will begin selling Lord & Taylor offerings through its website, Walmart.com, in the spring. The smaller chain, which is owned by Hudson's Bay Co., will have its own, separate boutique within the Walmart.com site and within its app, in addition to its existing LordandTaylor.com site.

"This type of move has become critical to the lifeline of companies seeking to grow or flex their e-commerce capabilities," notes Sean Maharaj, a director in the retail practice of global consultancy AArete. "I believe more of these unconventional partnerships are in the incubation phase or imminent."

In its quest to compete with chief opponent Amazon, Walmart has been pulling out all the stops to evolve its digital strategy. Earlier this year, it purchased popular men's retailer Bonobos as well as vintage fashion site Modcloth, on top of last year's acquisition of Jet.com for $3 billion.

Denise Incandela, head of fashion, Walmart U.S, ecommerce, said the goal of the deal is to "create a premium fashion destination on Walmart.com." Incandela, who formerly worked for Saks, which is also owned by HBC, added in a statement, "We see customers on our site searching for higher-end items."

"The announcement that Walmart would begin offering Lord & Taylor merchandise on its website in 2018 is yet another indication of the verve with which Walmart is attacking online sales, and is credit positive," said Charlie O'Shea, the lead retail analyst at Moody's, in a statement. He noted the importance of brick-and-mortar retailers to leverage their online capability, just as much as they're leveraging their physical assets, to maximize utility and efficiency.

For Lord & Taylor, the alliance will provide another source of attracting shoppers for a chain that has struggled in recent years to keep up with changing consumer demand. Earlier this fall, the retailer sold its New York City flagship, a landmark, to co-working startup WeWork, from which Lord & Taylor will rent a smaller portion of floor space and continue to operate its store.

In other odd couple pairings, Walmart competitor Kohl's began working with Amazon in October, piloting a test in which it will accept Amazon returns at Kohl's stores and sell Amazon devices. Early feedback has been positive, executives said earlier this month.

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