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Walmart
WMT
will open Netflix
NFLX
Hub shops selling merchandise from the streaming platform’s films and television series in more than 2,400 U.S. stores as it seeks to build on an online-only deal introduced last October.

“The Hub promises to bring fans closer to the shows and movies they love,” said Frank Barbieri, VP, content and digital, Walmart U.S., in a blog entry. “Walmart customers will find even more music, apparel, collectibles, games and seasonal items from all their favorite shows and films including ‘Stranger Things,’ ‘Squid Game,’ ‘The Witcher,’ ‘Guillermo del Toro’s Pinocchio,’ ‘Glass Onion: A Knives Out Mystery’ and more.”

In an online discussion last week, some of the experts on RetailWire’s BrainTrust saw good precedent, and good prospects, for putting Netflix swag on Walmart shelves.

“With just under 200 million paying subscribers, Netflix brings the entertainment opportunity to the Walmart customer base,” wrote Ananda Chakravarty, vice president of research at IDC. “This is a complete win-win. Netflix is copying Disney’s merchandise business model — which for those not following brings in over $56 billion annually. This is a huge opportunity for pushing the content from Netflix Originals. For Walmart it taps into a strong merchandising opportunity with notable names and shows with recognizable cult followings. Expanding for Walmart only makes sense, especially as they increase the Walmart+ value.”

“What is not to like?” wrote professor Gene Detroyer. “Once upon a time, there was a Mickey Mouse cartoon. Then there was a Mickey Mouse doll. The rest is history. The breadth of this offer is far greater than in-store shops with other retailers. To top it off, they provide an incentive to get more viewers. The move is an example of an actual domino strategy for a company expanding its business.”

“The Netflix hookup is a standard licensing program, yet Netflix offers a full portfolio of properties to Walmart with one deal,” wrote Carol Spieckerman of Spieckerman Retail. “The program allows Walmart to reel in business from multiple demographics and address diverse fan bases. Netflix’s ongoing events and outreach will boost the program without Walmart lifting a finger. All in all a sweet deal.”

“New products will drop seasonally to keep trending favorites at customers’ fingertips year-round,” said Mr. Barbieri.

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Beyond sales, Netflix in-store shops could be traffic driver for Walmart, similar to Target’s
TGT
225 Disney in-store shops as well as Macy’s recent installation of Toys ‘R’ Us shops across its doors.

But some on RetailWire’s panel questioned if Walmart would be the biggest beneficiary of the deal.

“This is probably a bigger win for Netflix than it is for Walmart,” wrote Gary Sankary, who handles retail strategy at Esri. “I don’t think there is a huge population of consumers hankering to find Netflix’s licensed merchandise. This will be an incremental play for Walmart’s already strong holiday offer. For Netflix it’s a new revenue source at a time when their subscriptions are in decline and business is challenging.”

Walmart will also sell a Netflix streaming gift card at $19.99. The gift card sales could help grow subscriptions for Netflix which saw declining subscriber numbers earlier this year for the first time. However, Netflix, which has produced over 1,500 original titles since it began creating original content in 2013, is increasingly looking to leverage its content to drive licensed merchandise royalties similar to the major studios.

Last year, Netflix introduced its own online store selling limited-edition merchandise in addition to launching Netflix Hub on Walmart.com. In mid-October this year, Netflix opened a 10,000 square-foot pop-up at Los Angeles’ The Grove shopping complex to mark its first multi-title brick and mortar destination.

Josh Simon, VP of consumer products at Netflix, said in a statement, “When we launched the Netflix Hub a year ago, we knew it was something special and we are thrilled to expand on this partnership bringing our fans even closer into the worlds of their favorite shows or films.”

Some on the BrainTrust saw prospects for expansion not just with this relationship in particular, but for both parties with additional partners on either side.

“Great idea,” wrote Shep Hyken, chief amazement officer at Shepard Presentations. “This brings a level of brick-and-mortar experience to a streaming platform. Selling merch and subscriptions through the Walmart system can be huge. What other chains can Netflix partner with? (Rhetorical question!) There are many!”

“Netflix Hub shops make Walmart cool among entertainment lovers — even discerning Gen Zs,” wrote Lisa Goller, content marketing strategist. “Items like Stranger Things Lite-Brite will also resonate with their Gen X parents. Limited-time product drops will drive store traffic as consumers keep coming back to see what’s new. To maximize sales, the assortment strategy will certainly align with Netflix’s most in-demand content. Walmart will likely seek more partners for in-store shops to make its abundance of stores even more enticing.”

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