Walmart’s Apparel Transformation With EVP of Apparel Division & Private Brands Denise Incandela

Shot close up of hangers holding a variety of clothing representing our recent podcast with Walmart about their apparel transformation.
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At our 7th Annual Future of the Consumer Conference, Denise Incandela, Executive Vice President of the Apparel Division and Private Brands for Walmart U.S. spoke with Oliver Chen, Retail & Luxury Analyst.  

Together they explored key innovations and transformations within Walmart’s apparel division, including re-envisioned experiences both in-store and online. 

Press play to listen to the podcast.  

Transcript

Speaker 1:

Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Oliver Chen:

In this episode, we’ll explore Walmart’s impressive apparel transformation and leadership, and experiential omnichannel capabilities. Hi, it’s Oliver Chen, Cowen’s new platforms, retail, and luxury analyst. We’re thrilled to host Denise Incandela, executive vice president of the apparel division and private brands for Walmart US. Denise is a visionary retail executive who has delivered growth and transformation for brands and specialty retailers for more than 20 years as a former executive with leadership positions at Ralph Lauren, Saks Fifth Avenue, McKinsey & Company, among others. Denise, it’s great to have you here.

Denise Incandela:

It’s nice to be here.

Oliver Chen:

So by way of introduction, could you brief us on the evolution of your amazing career? How did it intersect with Walmart and what unique perspectives do you bring?

Denise Incandela:

I mean, I started in investment banking, so I have an unusual background. Went to business school, then I went to McKinsey on the consulting side, and then I worked at Saks Fifth Avenue for 15 years, launching their digital business. Ultimately, we brought it to near billion dollars and then became their chief marketing officer as well as running their digital business. And then went to Ralph Lauren where I ran their global digital business and then ultimately came to Walmart. And I think for me, the benefits of my background, the finance is an important part, the analytical part, because in order to be successful as a merchant, you really need to understand the business and make sure that when you are driving transformation that it pencils. And so that’s a important part for me of my background, and the McKinsey part is also very important because we make fact-based decisions.

And so again, when you’re driving transformation, make sure you’re testing it in small ways, fail fast, and pivot. And then make sure you’ve got the data to support because when you’re driving a business at the magnitude of Walmart, you make a mistake, it can be worth billions. And so I’m very grateful for that part of my background. And then of course, working in luxury, I think probably the most impactful impression on me is that everybody loves beautiful things. And whether a dress costs a thousand dollars or whether a dress costs $15, it should be beautiful, and it can be beautiful because color and print, any even silhouette, it’s the same cost. Whether it’s beautiful or not beautiful, it’s the fabric that really differentiates the cost.

And so bringing beautiful clothes and democratizing fashion and bringing the aesthetic of luxury and the taste level of luxury to the mass customer where having supported and served the top 1% for most of my career and then pivoting to supporting the 99% has been the most fulfilling and bringing kind of the best of luxury that translates into mass to democratize fashion is what I’ve been focused on.

Oliver Chen:

Yeah. Lots of great themes there, magic and logic and having the right data, but also driving this save money live better value proposition. So what about the new Walmart, what are three things you’re most focused on ahead of Walmart?

Denise Incandela:

Yeah. On the apparel side, we’re focused on three big things. One, of course, overhauling, transforming the assortment. And that includes everything from our opening price point, private brands, and making sure they look beautiful and the quality is there and the aesthetic and style are there in ways that they haven’t been before. Again, being ruthless and meticulous about driving extraordinary value, but making sure that the clothes are beautiful. The second big component is we’ve learned that 80% of our Walmart customer closet is in higher average unit retails than opening price point. And so we weren’t serving a huge portion of her closet. And because of that, we wanted to make sure that we were supporting her closet and greater wearing occasions. And so we brought in national brands, think Reebok, Justice, Chaps, Celebrity Pink, Steve Madden.

We also worked with celebrities to build a higher level, still extraordinary value, what we call elevated private brands. And that’s Scoop, the dress I’m wearing here today that costs $36. The Sofia Vergara, Brandon Maxwell, who’s a creative designer, is working with us on Free Assembly and Scoop. Sophia is working with us on her brand, and then we’ve got others as well. So those are the three big tenets of the assortment overhaul. It’s the opening price point, making more beautiful national brands and then the elevated brands. All of that is about assortment, but assortment doesn’t stand on its own without an experience. And so overhauling the stores, creating the store of the future, which we can dig into at a later point. But that is a huge transformation for us because the customer is seeing that the product is the hero as well as the online experience. And then finally changing perception of Walmart, that’s the third tenant.

Oliver Chen:

What do you think the new customer wants or your existing customer wants? What are customers looking for out of product as you continue to innovate?

Denise Incandela:

Yeah. Look, she’s looking for more wearing occasions from Walmart. We have built an extremely successful big business on a foundational basics business, underwear, socks, denim, tops, tees, et cetera. She’s looking for more wearing occasions out of Walmart, and so she’s looking for opening price point, and we continue to work on dominating there. We will serve her needs so she can save money and live better. In opening price point, there should be at least a mid-teens price gap between our prices and the competition. But she’s also looking for a dress that’s $36, a dress that’s $20 that she can wear beyond just denim and t-shirts.

Oliver Chen:

Yeah, it’s a trusted place from the pharmacy to fashion to essentials [inaudible 00:06:26] style. How do you balance this, Denise, between product innovation, the store of the future, and rethinking the awareness and how Walmart’s positioned?

Denise Incandela:

Yeah. We have to work on all three at once, so you can’t be linear. And so we’ve been working on the assortment for quite some time for three years. And as you can imagine, the lead time is quite long. We have our store of the future, which we tested or testing in 30 doors right now, rolling out to 300 this year. And then we will continue to roll out over time. We’ll showcase that product in ways where the customer will see it and respond to it in a much better way. And then the awareness component, you can create great product and change the store and online experience, but if she’s not aware of it, we’re not winning on all cylinders. And so really distorting into influencers and leveraging their credibility to accelerate perception change is a big part of the strategy. So in my mind, you have to do all three at once and you’re constantly iterating and testing as you go along.

Oliver Chen:

What is most exciting to you in terms of the next-generation store experience? How do you see experiential retail evolving over time?

Denise Incandela:

Mm-hmm. So for us, we were focused on four things. One, I talked about the assortment, the national brands, the elevated brands. So we created premium shops upfront showcasing the newness. We have a significant number of people who come into our stores every week buying grocery. We want them to see the change in apparel, and we think apparel can be a halo for the store. And so those premium brand shops upfront are critical for that reason. The second is creating an inspiring shopping experience, which historically hasn’t been something that we’ve done well. So think mannequins, video screens, et cetera, and new fixtures. And then the third is removing the clutter for Walmart, which we took 10% of the inventory out, 10% of the racks out, made the product the hero so she could see it more easily.

And then finally the last was, we are the biggest retailer in the US in certain categories. Think denim, we are the biggest denim retailer in the US. We need to look like we’re the biggest denim retailer in the US. So taking parts of the store and making them category killers, like looking like category killers. So those are the things that we’re doing. Also infusing technology into everything that we do. And so whether it’s RFID or our virtual try-on that we are offering online thinking about how to bring that into the store. So I think the future, thinking about enabling the customer to buy online, pick up in the store, ship from store, all of that, those omni services and the complex of digital and stores is the big unlock for a company like Walmart where we have 4,000 doors, which is unmatched.

Oliver Chen:

Yeah. As you think about these unique opportunities ahead, which ones are going to be more challenging in your opinion?

Denise Incandela:

On the product side, I think we’ve made great progress. We still have more to go, we’re never satisfied. We’re kind of constantly happy and then yet dissatisfied at the same time. But I’d say we are further along on the journey on the product transformation. On the store transformation, we have 4,000 doors, and so that is a big undertaking. And right now, as I say, we’re rolling out 300 this year. Really excited about the format. If anyone knows execution, it’s Walmart, but rolling out to 4,000 doors is a big one. I think the third one and changing perception and broadening our customer reach comes with nailing the first two well. I think that figuring out how to leverage technology in efficient and effective ways that benefit the customer is something that we’re constantly trying to figure out. So that one is a hard one yet really exciting because we’re starting to get glimpses of where it can work.

Oliver Chen:

You’ve been a leader across so many aspects of retail with very famous brands prior to Walmart, which parts of your history are really helping inform what you’re doing here, would you highlight?

Denise Incandela:

Yeah. I think that certainly working for a brand like Ralph Lauren, where there is extraordinary focus on the brand itself and protecting the brand and thinking about that for our own brands. We have six brands that are billion plus, many of them 2 billion plus. So building them out as brands versus just private labels is a big opportunity for us, and that’s something that I’m focused on that my background is helpful to me as we think about how we do that. And then just really bringing in a leadership team, because, in the end, that comes down to the team who really understands fashion. And people have come from everything from Neiman and Saks to Kohl’s and Target and Amazon, Macy’s, bringing in pros who really understand fashion and that I have a great appreciation for my past life of putting the right people in the right roles.

Oliver Chen:

Yep. And this theme of magic and logic comes up a lot with thinking about assortment and thinking about great merchandise. We at Cowen believe Walmart is an ecosystem too. So as you think about marketplace model and fulfillment and Walmart Connect, what are some highlights about how that’s intersecting with what you do?

Denise Incandela:

You think about the assortment as the head, the torso, and the tail. And so we’re focused in the private brands and our national brands on the head, really focused on that. But building out the torso and tail, and that’s where our partners through marketplace and have offering an endless aisle because we want to be, of course, the number one destination for apparel, whether she’s shopping in one of our 4,000 doors or online. And we want her to be able to shop with us any way that she wants, whether she’s buying in-store and taking home with her, whether she’s buying online coming to the store to pick up, or whether it’s getting shipped from our fulfillment center or from our stores.

So all of that is part of the magic and the convenience of a Walmart, because, in the end, that’s part of our value proposition too. This extraordinarily convenient shopping experience where you can get your groceries as well as your apparel and you can buy it online, in-store, pick up, whatever it is, or through a marketplace partner, which are incredibly important to us in making sure that we’re offering her a long tail beyond what we’re building and buying ourselves.

Oliver Chen:

Yeah, it’s quite connected, quite convenient, and really adding that feature, and time is the ultimate luxury, as you know. Which parts of this journey excite you the most?

Denise Incandela:

The opportunity to reposition Walmart, which is an extraordinarily successful business as a destination for fashion, I think gets all of us excited, and the whole leadership team. And the combination of the tens and tens of millions of people who are in our store for grocery shopping and combining that with an elevated style experience that still provided an extraordinary value is unprecedented because no one has the grocery footprint that we have. And by adding the style categories on top of that legitimate, credible style categories, that I think is a game changer, and that’s what we’re working to do and so excited about doing.

Oliver Chen:

Last question. You’ve been a wonderful guest at my class at Columbia where we talk about retail and magic and logic. What’s your career advice for younger people interested in retail?

Denise Incandela:

Gosh, I have such a passion for retail. I remember in my consulting days serving retail companies and always being so attracted to the retail industry because if you love product and if you love driving a business, there’s nothing more exhilarating than retail. My advice would be, get into it as early as you can in any way that you can, and don’t get hung up about the role that you have, because the role will change 20 times over the extent of your career. It’s more about getting experience. Even working in a store as a salesperson is invaluable experience. So if you have that passion for retail, jump in and know that if you love what you do and you work hard, opportunities will present it themselves, and sooner or later you’ll end up in a place where you’re really fulfilled and excited and doing great things.

Oliver Chen:

Yeah, it’s so important to be connected to the customer, agile and flexible, and also very resilient. And it’s so exciting because so much change is happening with lots of new kinds of opportunity that we can’t even imagine.

Denise Incandela:

Yeah. The customer is at the center of everything we do. Everything that we do is informed by the customer. The assortment changes, the store experience, everything we do, we test with the customer. And then even in terms of broadening reach, like using influencers who are our customers. And so that’s what’s so exciting about retail is the customer can be part of the solution as well.

Oliver Chen:

Yeah, I think that’s a great theme in terms of community and engagement. So, Denise, it was such a pleasure to have you. Thank you for your time.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.


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