Walmart (WMT) to Power Online Business with Gap Home Collection – May 27, 2021

Walmart Inc. (WMT Free Report) has focused on expanding its assortments, both in-store and online, which helps this omnichannel retailer continue to enrich its customer experience. In this sense, the company has for the first time announced a strategic agreement with The Gap, Inc. (GPS Free Report) to launch Gap Home only on Walmart. Notably, the Gap Home collection will launch on on June 24 and will include more than 400 home-related products.

We believe this partnership will be beneficial for both companies, given the increased demand for home-related products amid the higher home stay trends induced by the pandemic.

Well, Gap Home is a new brand, which will be offering home essentials like home decor, bedding and bathroom, as well as the table top at Walmart. Additionally, new seasonal and special collections at Gap Home will be introduced throughout the year, which will be developed in conjunction with IMG, Gap’s licensing agency. Walmart has been looking to strengthen its home assortments for a few years now, and management believes Gap Home will be a great fit as it will give Walmart customers access to premium and stylish products at a reasonable price.

It should be noted that Gap is the first fashion retailer to team up with Walmart in the home category. This partnership brings together two major emblematic brands. While Walmart’s robust digital reach and distribution will be a defining factor for Gap, the former should take advantage of Gap Home’s timeless American style. Certainly, this multi-year agreement is likely to solidify Gap’s customer base, as well as Walmart’s online sales.

Walmart strengthens its online business

The aforementioned addition of Gap Home to has the potential to help Walmart take another step on the online growth ladder. Walmart’s e-commerce business and omnichannel penetration has increased, especially against the backdrop of pandemic-induced social distancing. Certainly, its combination of a robust store network and growing digital capacity is likely to keep it in good shape. The company has long tried all means to evolve with the changing consumer environment and to stand firm in the face of increasing competition from Amazon (AMZN Free report).

In this regard, Walmart has taken several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. On May 13, 2021, the company announced its intention to acquire Zeekit, an Israel-based company that focuses on the union of fashion and technology through its virtual dressing room platform. In the third quarter of fiscal 2021, Walmart unveiled an additional investment in Ninjacart in India, for technology and supply chain solutions. Apart from these, the company’s contracts with Goldman Sachs, Shopify (SHOP Free report) and Green point; the buyouts of ShoeBuy, Moosejaw and Bonobos, among others, underline its intention to build an impressive portfolio of digital brands. In addition, the purchase of a major stake in Flipkart strengthened its International segment.

Additionally, Walmart is making aggressive efforts to expand into the burgeoning online grocery space, which has long been a major contributor to online sales. E-commerce sales in the United States climbed 37% in the first quarter with strength across all channels. In particular, market and in-store pickup and delivery remained strong. At Sam’s Club, online sales jumped 47% thanks to strong direct in-home exposure and strong curbside performance. In the International segment, e-commerce sales jumped by nearly 64%. Impressively, this Zacks Rank # 2 (Buy) stock has risen 16.8% in the past year, compared to 16.5% growth for the industry. You can see The full list of current Zacks # 1 Rank (Strong Buy) stocks here.

As for the aforementioned partnership, the launch of Gap Home is most likely to drive the growth of both Gap and Walmart.

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