Although Walmart’s global e-commerce operations reported 22% gains in sales for fiscal year 2015, U.S. same-store sales at Walmart stores were comparatively lackluster at +0.5%. Overarching retail trends like declining store traffic, the “death” of malls, and rise of online shopping (and, of course, have been discussed at length by analysts and industry pundits with Walmart executives announcing plans to combat this in-store shopping fatigue by improving customer experience, keeping prices low, and expanding product assortment. While this three pronged approach to engaging shoppers and promoting loyalty to Walmart seems well-meaning, it’s also very broad and, quite frankly, could be used to define the strategies of any one of Walmart’s competitors, including Amazon.

Using the years of syndicated insights Prosper has collected on Walmart, I took a deeper look at one of the big discounter’s core customer groups – its grocery shoppers – in order to gain a better understanding of what ails this retailer. This analysis revealed that potential revenues are leaking like a sieve out of Walmart’s apparel departments, with Kohl’s lapping up a hefty proportion of Walmart’s so-called “lost opportunity.”

Before we take a look at the dollars and cents Walmart is potentially losing to Kohl’s, let’s backtrack a little for some perspective on this group of shoppers. Walmart’s grocery business unit accounts for the majority of the retailer’s net sales in the U.S. and represents a more stable, substantial segment of customers for the retailer (according to Prosper intel). The proportion of overall consumers who shop Walmart most often for groceries has followed an upward trend over the past decade as the retailer concurrently faces declining loyalty in apparel, shoes, and home softlines.


We begin to see the instability of this group for Walmart, however, as we examine the other merchandise categories that these shoppers peruse (see chart below). Among Walmart grocery shoppers, 21.5% also shop Walmart most often for women’s apparel; that figure seems pretty substantial until you consider that is has fallen 42% from February 2005. We see similar results in other apparel categories among these shoppers as well (Feb-15 vs. Feb-05): Men’s (-38%), Children’s (-32%), Shoes (-47%).

Enter Kohl’s. While Walmart remains the overall top choice among its grocery shoppers for apparel and shoes, the department store has been steadily collecting loyalty among this shopper group. For instance, 11.8% of Walmart grocery shoppers currently indicate that they shop Kohl’s most often for women’s clothing, an increase from just 3.4% in February 2005 (as the department store was building its national presence). In women’s, men’s, and children’s apparel, Kohl’s currently remains Walmart’s top competitor for the attention of the discounter’s grocery shoppers; in shoes, Kohl’s is a close second behind Payless.

With a significant number of their grocery shoppers leaving Walmart to spend their apparel dollars elsewhere, what’s the impact to Walmart’s bottom line? Based on Prosper’s spending and retailer preference insights, the grocery shoppers who are also loyal to Walmart for apparel and shoes have the potential to spend $19 billion on these categories within Walmart itself (which is in line with Walmart’s SEC filings regarding its apparel unit sales). However, among the Walmart grocery shoppers who head to Kohl’s, these shoppers are taking an estimated $7 billion budgeted for apparel and shoes with them.

Why are these shoppers choosing Kohl’s over Walmart for apparel and footwear? While price remains key, selection, quality, and coupons/promotions are paramount for these shoppers compared to those who stick around Walmart for their clothing and shoes. In short, they like the thrill of the bargain hunt for quality finds – an experience that everyday low price Walmart doesn’t necessarily provide.

Looking back at Walmart’s strategy for improvement in 2015, the big discounter is well advised to improve the customer experience and product assortment. However – at least where apparel is concerned – low prices won’t likely be enough to lure grocery shoppers back into its apparel departments. And with discounter/grocery hybrids like Meijer and Kroger¬†(Marketplace stores) ramping up their softlines offerings, Walmart may have more to worry about than Kohl’s in the near future.

This article originally appeared on

Walmart’s $7 Billion ‘Gift’ To Kohl’s
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