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To answer this question, Michael needs to understand the difference between “estimated” and “average” gross margin, and what that would mean for a buyer.
Kevin explains the unique strategy Walmart is able to deploy purely due to the fact that it does not specialize in any single product category.
Yet, Walmart has another major advantage linked to seasonality and this directly impacts merchandising. Kevin tries to help Michael identify this advantage.
To ensure the category increases Walmart’s overall gross margin, Michael tries to think through all the criteria Walmart would need to apply when selecting toys.