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United States Of America : Wal-Mart Poised To Take On Apparel Sector |
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2003-7-1 9:18:00
Down the hall from the office of Wal-Mart Chief Executive Lee Scott, a poster tacked to the wall reads: "Who is taking our business? Kohl's."
Not Target Corp., the second-largest U.S. discount chain, or
Paris-based Carrefour, the world's second-biggest retailer, but mid-priced department store chain Kohl's Corp. --a company whose annual revenues are smaller than U.S. sales taxes paid by Wal-Mart Stores Inc.
Wal-Mart, the world's biggest company by revenues, has always made a point of keeping a close eye on competitors -- even much smaller ones.
"They are maniacally focused on the consumer and the competition," said Michael Collins, a partner with consulting firm Bain & Co. But singling out Kohl's could spell trouble for the fast-growing department store chain, and it signals a brewing price war in the U.S. clothing sector, analysts say.
"Wal-Mart indicating that Kohl's is stealing their business means that they are intent on going after the apparel retailing market just as they've gone after the food and drug retailing markets," said Bill Dreher, retail analyst with Deutsche Bank.
Dreher rates Kohl's shares "sell," and Wal-Mart's "buy." Kohl's did not return calls seeking comment.Wal-Mart has built up an arsenal of name-brand clothing to compete with Kohl's and other department stores, many of which are already struggling with slack demand and diminishing traffic at shopping malls.
This month, Wal-Mart is rolling out an exclusive line of low-priced
jeans made by Levi Strauss, although the legendary jeans maker said the Signature line would be available in other stores in Asia later this year. Wal-Mart also has a deal with Carter's for baby and children's clothes. Both are major brands for Kohl's.
Wal-Mart said the most expensive pair -- the "plus"-sized denims -- will sell for just under $25. That compares with around $29 for the lowest priced pair available on Kohl's Web site. Internet stores were offering Levi's classic 501 blue jeans for as little as $39.95.
In another ominous sign for the apparel industry, Wal-Mart is opening two stand-alone clothing stores in Britain this fall to showcase its George fashion line, which is already being sold in stores in the United States and elsewhere. The retailer said it will study the two stores for at least a year before deciding whether to open more.
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