Walmart (WMT -0.08%) apparently hasn't heard the adage "if it ain't broke, don't fix it." The retail giant is taking one of its most successful billion-dollar brands and completely overhauling it to better represent "inclusivity, body positivity and styles that prioritize comfort and confidence."
While those are worthwhile goals, it doesn't explain why the retailer needs to change what has to-date been a runaway success story. It risks decoupling consumers from one of their favorite brands.
Image source: Walmart.
A fresh start
Walmart announced it was changing the name of its private-label intimates and sleepwear Secret Treasures brand to Joyspun in a bid to offer new and better fabrics and styles while still presenting the retailer's signature discount pricing.
Because there is a transformation taking place in the apparel category toward recognizing that there is a world of body styles, Walmart believes it was necessary to basically start from the ground up -- what Walmart's executive vice president for apparel and private brands likened to "operating more like a start-up." The Secret Treasures name was discarded, Joyspun was added, and a team of in-house designs created the new collection.
That's all well and good, but it doesn't explain why the Secret Treasures brand, which has been part of Walmart's portfolio since 1999 and delivered more than $1 billion in annual sales last year, needed to be tossed.
While it seems clear Walmart didn't want to be even tangentially associated with Victoria's Secret after the criticism it faced for years of promoting what many considered an unattainable body type, it's hard to believe anyone shopping for intimate apparel and sleepwear at Walmart would be confused by what was being sold. And the billion-dollar sales threshold showed consumers certainly weren't concerned.
White-label goods are Walmart's key to success
Private labels have been core to Walmart's DNA for decades, having first been introduced back in 1983. Anyone who has shopped at one of the retailer's supercenters is familiar with the Great Value brand, which, according to data from market research firm Numerator, nearly 73% of all U.S. consumers have purchased. In fact, Walmart owns the top four slots in the five biggest private-label brands.
CEO Doug McMillan has said the company's private-label goods are growing faster than Walmart's overall sales, and while Great Value produces more than $27 billion in annual sales alone, 18 of them do more than $1 billion in sales. Secret Treasures is one of these, so changing it to the arguably worse-named Joyspun could interrupt that growth trajectory.
Walmart has a long and complicated history with fashion, and a poor track record whenever it tries to leave its lane. Previous forays into upscale apparel did not work out well, and it had to abandon most of them. At least in this case it's keeping the everyday low pricing that consumers turn to Walmart to get.
A rose by any other name
Even though the change is being made for the laudatory purpose of ensuring the intimates and sleepwear apparel it sells appeal to a diverse range of customers, this could have been accomplished under the Secret Treasures brand.
The question is whether customers shopping for apparel are searching out that particular label, or would they have bought whatever was on the rack -- even if it had been called Hazel's Closet? Because Secret Treasures has been so successful for Walmart, investors better hope it won't cause the brand's growth trajectory to unravel.
