Everything old is new again, or maybe it's everything refurbished is new again.
Walmart (WMT +0.16%) is getting into the refurbished consumer electronics game, and it's a smart move as it meshes well with its price-sensitive consumers. While just about everyone is price-sensitive in this time of high inflation, elevated energy costs, and rising interest rates, the like-new refurbished market seems right in the retailer's wheelhouse.
Image source: Walmart.
Just like new
Walmart recently launched Walmart Restored as part of its website, where it lists consumer electronics and appliances from its preferred third-party sellers and suppliers that have been refurbished to like-new condition. The prices are reportedly "a fraction of typical costs," and after the products have been inspected, tested, and cleaned, they will also not have any visible imperfections when viewed at a short distance. They also come with a 90-day free return guarantee.
The program will initially only be on the walmart.com website, but will move into select stores later this fall. Among the brands included in the program are Apple, HP, KitchenAid, and Samsung.
Although Walmart is not alone in offering refurbished goods, the inflationary era people are enduring means it's a timely introduction of the program. It's the back-to-school season, which is a good time to pick up laptops, tablets, TVs, mobile devices, and other consumer electronics -- and it launched sufficiently before the start of holiday shopping, which gives an opportunity to get a head start on the rush of goods.
NASDAQ: WMT
Key Data Points
A growing need to offload goods
Walmart is the largest retailer in the world, but it has been hit by slowing sales and recently announced it needed to unload a boatload of merchandise at discounted prices to clear inventory that wasn't moving.
It also provided a business update that indicated profits would be materially hurt by rising prices and expenses, and more recently announced it would be laying off hundreds of employees at its corporate offices.
The Walmart Restored program was likely an outgrowth of this developing financial reality. Although apparel is where the retailer is experiencing a build-up of inventory that it needs to work down, its sellers and suppliers are obviously inundated with a lot of product returns that they need to move as well.
A sea of refurbished goods
It's not the first time Walmart has experimented with resale items. A few years ago, the retailer partnered with returns company goTRG to sell refurbished Apple products on its website. goTRG works with a number of major retailers, including Home Depot, Lowe's, and Amazon.
Amazon actually started its own refurbishing program, Amazon Renewed, to sell pre-owned goods that have been restored, as have others such as Apple, Best Buy, and eBay.
Although it took refurbished consumer products a while to gain market acceptance as people feared they were getting damaged goods, the entire secondhand market has taken on a life of its own, particularly during the early days of the pandemic.
Customers now have selections of used clothes, sneakers, consumer electronics, and appliances to choose from. In many instances there has not been any appreciable upgrade in design or innovation of the products, but prices have continued to spiral upwards. So consumers are more willing to purchase refurbished goods. And with retailers standing behind the used products they're selling, it's given customers confidence to buy them.
A good start
The program won't do anything to help Walmart's margins in the short term, but it could increase website traffic, which could eventually lead to greater sales elsewhere.
It's a realization that buyers are under more pressure today than they've been in years. Because Walmart is associated with everyday low pricing already, the program should be successful in moving merchandise. That can save its customers a lot of money, while increasing website traffic and customer loyalty.
