Walmart Just Wanted to Sell Pricey Outdoor Gear. Then 'All Hell Broke Loose.'

Sarah Nassauer

The Wall Street Journal

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Sarah.Nassauer@wsj.com

Sept. 7, 2018 7:00 a.m. ET

Walmart Inc.’s WMT -0.18% plan to sell high-end hiking, camping and other outdoor gear on its website hasn’t started well, a sign of the challenges the discount chain faces as it tries to stretch further into Amazon.com Inc.’s territory.

Last week Walmart said it would start selling items including $250 Deuter hiking backpacks and $100 Leki hiking poles, adding to its website brands already sold through Moosejaw, the small outdoor retailer Walmart bought last year. The brands were clustered in a “premium outdoor store” within Walmart.com and curated by Moosejaw.

But several brands, including Leki, Deuter and climbing-gear seller Black Diamond Equipment, asked to be removed from Walmart.com, which did so. When the products appeared on Walmart.com, outdoor stores contacted the brands, some expressing concern that Walmart would eventually push product prices lower, said executives from outdoor-gear companies and retailers. In some cases, Walmart’s competitors told brands they would stop selling their products if they remained on the site.

“We launched, and then all hell broke loose a little bit within the outdoor industry,” Moosejaw Chief Executive Eoin Comerford said in an interview. “I didn’t expect the reaction to be quite so vehement.”

About a third of the premium outdoor brands have left walmart.com, Mr. Comerford said. Walmart has added other brands and expects to make up those losses within about two months, he said.

Walmart’s competitors “were very frustrated by our decision” to sell on Walmart.com, said Shawn Hostetter, president of Katadyn North America, which sells water-filtration systems and is owned by Swiss firm Katadyn Group. Some outdoor stores said they would cut sales of the filter company’s products, citing concerns that Walmart would drive down prices, he said.

“We made a decision that this time is not the right time to be on [Walmart.com],” Mr. Hostetter said.

The dust-up highlights the pressures faced by both brands and retailers as they struggle to adapt to the rise of online buying. Brands are looking to boost sales online while still controlling the price and selection available. Traditional retailers are more aggressively facing off with Amazon, ensnaring brands. For Walmart, the outdoor-store challenges foreshadows the balancing act ahead as it tries to maintain its reputation for low prices while attracting more premium brands that want to keep prices high.

Walmart wooed brands for months, including Katadyn, often by offering the small firms the ability to manage how outside sellers on walmart.com display and price the firm’s products, said some of the firms. Mr. Hostetter said that was an appealing offer after years of competing on Amazon with outside sellers that were willing to slash prices on branded products.

The negative reaction from retailers reflects the pressures facing the outdoor gear industry but is shortsighted, according to Mr. Comerford. Consumers already expect products to be widely available, he said, so limiting how and which consumer can buy products is “just not going to work long-term.”

Some brands agreed to be named in Walmart’s news release announcing the new concept, others wanted to be more subtle, he said. In hindsight, for those that didn’t want to be named, “we might have looked to say, lets downplay them a little bit more on the site itself,” Mr. Comerford said.

Walmart executives have said that bringing a wider spectrum of brands onto Walmart.com is a key part of the Bentonville, Ark., company’s strategy to boost online margins and sales. Walmart bought Moosejaw, an outdoor retailer based in Madison Heights, Mich., for $51 million last year, part of a string of acquisitions of small online sellers of high-end products. It also has redesigned its website with a more high-end feel.

After Walmart put its premium outdoor store online last week, the Grassroots Outdoor Alliance, an organization of 70 small U.S. outdoor retailers that share data and advocate for the industry, recommended that its members put all orders on hold from brands involved, said Rich Hill, the group’s president. The group’s members are wary of navigating falling product prices on another online marketplace after their experience with Amazon, he said.

“I think a lot of these retailers feel they have suffered as a result of Amazon moving into the space,” said Larry Pluimer, chief executive of Indigitous, a firm that represents brands selling on Amazon and a former manager of the outdoor-product category for Amazon. “To have another giant like Walmart move in is maybe the straw that breaks the camel’s back.”

Wes Allen, co-owner of Sunlight Sports, an outdoor-gear store in Cody, Wyo., said he emailed executives at brands listed on Walmart.com, including Black Diamond, to say his store would stop ordering their products. “Associating your premium brand with Walmart makes it not premium anymore,” Mr. Allen said.

That is “dated thinking,” said Mr. Comerford, because shoppers from all demographics shop on Walmart.com.

Black Diamond said in a news release last week that it sent a cease-and-desist letter to Walmart demanding pictures of Black Diamond products and its logo be taken off Walmart.com. “We did not see or approve the statement which Walmart released [Aug. 27] and have never sold to Walmart,” said Black Diamond’s president John Walbrecht in a statement.

“We would never activate a brand without their permission,” said a Walmart spokeswoman.

Write to Sarah Nassauer at sarah.nassauer@wsj.com

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