Walmart had a good year.
The retail giant beat estimates for a 6% increase in year-over-year revenue to $648 billion for fiscal year 2024. Outside of strong performance at the cash register, the company did well across its other metrics, finishing the year with a strong fourth quarter and big gains in e-commerce.
But what about the toy department?
As many in the industry — myself included — already knew (or, at the very least, suspected), there was “softness” in toys at both Walmart U.S. and Sam’s Club U.S. last year. While the company didn’t share a detailed breakdown, it did call out toys as one of a few categories that led to a low single-digit decline in sales for general merchandise.
In recent months, I’ve been critical of big-box retail in the U.S. in terms of customer experience, or lack thereof. As I mentioned last month, shopping for toys and games can be a pretty dismal experience of late and that needs to change fast.
Basic retail fundamentals, including stocking, pricing, and normal daily maintenance and upkeep seem nonexistent at many stores from coast to coast. Additionally, retail gets dated very quickly and needs a constant infusion of NEW and FRESH in both product and display options to keep shoppers excited and engaged.
For Walmart, an ongoing remodel initiative could be moving the needle.
On this week’s earnings call, John Furner, President & CEO of Walmart U.S. called out success in some of the nearly 700 stores that the company remodeled last year, many of which had their grand reopenings in November. The more open layouts, according to Furner, led to things “coming together” in Q4.
“In particular, we’re really pleased with the toy performance where we saw unit share gains with big brands like LEGO, Mattel, and Melissa & Doug,” Furner says. “So, there are some really nice signs coming out of those stores, and we’re really looking forward to this year.”
Walmart plans to remodel 650 additional stores in the U.S. throughout 2024.
Doug McMillon, CEO at Walmart, adds that getting inventory back to manageable levels last year — “to where people can find things” — helped fuel the 17% spike in e-commerce business during Q4.
“I think helped us a lot when it came time to pick toys at the last minute,” he says.
In speaking with executives for our annual State of the Industry Q&A series (launching Feb. 26 alongside the release of The BIG Toy Book), several of them agreed that one of the biggest opportunities ahead is the reinvention of the retail experience in the U.S.
It’s also a challenge and something that cannot be done alone.
It will take true collaboration and partnership.
“Retail theater,” as the saying goes.
When the original Toys “R” Us collapsed in 2018, so many retailers rushed to capture market share as they chased short-term sales versus long-term success. Within 12-18 months, several retreated and scaled back after realizing that you can’t just pile toys and games on a shelf and expect them to sell themselves.
Who will step up this year?
