Wal-Mart goes 'deep' on holiday inventory in bid to boost sales

By Nathan Layne
Shoppers look at merchandise at a Walmart store in Secaucus, New Jersey, November 11, 2015. REUTERS/Lucas Jackson

By Nathan Layne

SECAUCUS, New Jersey (Reuters) - Wal-Mart Stores Inc says it significantly boosted its holiday inventory for electronics, toys and other potentially popular products, betting that the promise of being in-stock will attract customers during this crucial shopping season.

Wal-Mart could use the boost: margins at the retailer, due to report fiscal third quarter earnings on Tuesday, have come under pressure due to costs related to entry-level wages, investments in e-commerce and competition from Amazon.com as well as regional supermarkets and dollar stores.

"We bought really deep. It's our commitment that we are going to have product and that is one of our key advantages," Steve Bratspies, chief merchandising officer, told reporters at store in Secaucus, New Jersey, as he outlined plans for Black Friday, the day after Thanksgiving that traditionally kicks off the year-end shopping season.

The retailer also plans to offer online 96 percent of Black Friday deals available in store, up from 90 percent last year. The promise of an abundance of product in its 4,600 stores and online is a key plank of Wal-Mart's holiday strategy, but it is not without risk.

The National Retail Federation is predicting industry sales will rise 3.7 percent in November and December, a slow down from last year.

Some other researchers are also warning of slower growth due to stagnant wages, a sluggish stock market and tough price competition, and on Wednesday, department store Macy's Inc raised further concerns about the retail sector after it reported weak sales and cut its full-year forecast.

Greg Foran, head of Wal-Mart's U.S. operations, said he was comfortable with the retailer's inventory levels. "I think we are OK at this point in time. We'd like the temperature to cool down a bit in parts of the country, but we are not at a point where we have to do anything," he said. Warm weather hurts sales of winter clothing.

Wal-Mart will kick-off its Black Friday promotions early Thanksgiving morning online and Thanksgiving day at 6 p.m. in its stores. It said it would make all deals available from the start, rather than staggering them as it has done in the past.

In an example of its purchasing scale, the retailer said it would have more than 10 million pairs of pajamas and more than 1 million televisions in stock for Black Friday. Wal-Mart is also banking on a strong season for toys. That is partly due to the increased incorporation of electronics, which have made the toys on offer more interesting, Foran said. "I think this department is probably going to be in for the biggest Christmas it has had in a long time," he added.

(This version of the story corrects volume of pajamas stock to 10 million from 15 million in paragraph 11)

(Editing by Miral Fahmy)