Looks from Modcloth.


Wal-Mart has been racking up style cred through a string of e-commerce purchases as it chases Amazon in the online world.

And its purchase of online specialty retailer ModCloth, confirmed Friday, is another step in that race as well as a chance for the company to grow brick-and-mortar. The buzzed about e-commerce brand boasts an engaged community of customers who post images of themselves wearing products.

The price of the deal wasn’t disclosed.

“Today’s a big day,” Matt Kaness, chief executive officer of ModCloth, said in an interview. “We’ve really been excited about the opportunity to grow the business. Beyond the resources associated with the Wal-Mart deal, this gives us the opportunity to scale and reach more women.”

Kaness ticked off ways that ModCloth will grow its business. “Think about customer acquisition, the opportunities online and off-line are both really exciting for us,” he said. “As primarily a digital retailer, one of the things we can now do is grow faster through digital channels. Off-line, we’re just getting started, but we’re confident about our model, where all the styles in the shop are available in all sizes. The model of the store is predicated on accelerating digital business by using the storefronts to drive engagement and recognition.”

Admitting that the newly minted partnership has “a lot that we have to talk through,” Kaness said, “we could have at least 100 different brick-and-mortar locations across the U.S.” The timeline is still a bit fuzzy. “Brands are built over decades and generations,” he said.

ModCloth is the latest acquisition in the online world by Wal-Mart. The retailer in January bought Shoebuy, an apparel and accessories site for $70 million from IAC, in a move that was seen as a turning point for Wal-Mart in terms of fashion. The deal was aimed squarely at Amazon, since Shoebuy is a direct competitor of the Amazon-owned e-tailer Zappos.

Wal-Mart in February paid $51 million for Moosejaw, a web site selling apparel and footwear with an outdoor focus. Hayneedle, a home furnishings and decor e-tailer is also part of Wal-Mart’s portfolio.

Jet.com, which Wal-Mart acquired in August for $3.3 billion has facilitated and fueled the Bentonville, Ark.-based retailer’s interest in fashion and upscale consumers. Marc Lore, founder of Jet.com, now oversees Wal-Mart’s digital operations and appears to be the driving force behind the retailer’s newfound aggressiveness in the sector. He also used to work at Amazon.

“Apparel and accessories is the number-one category for digital commerce, according to comScore,” said a Wal-Mart spokesman, adding that with ModCloth, “we gain the experience of a well-recognized specialty apparel e-commerce brand that’s trusted by millions of Millennial women.”

“ModCloth’s catalogue offers thousands of choices in clothing and accessories, including highly differentiated, exclusive styles and an extended range of sizes that appeals to a broad demographic of women,” the Wal-Mart spokesman added. “The compelling styling, branding and content currently available on ModCloth online, along with deep industry relationships and expertise, will help us further enhance our overall customer experience.”

It’s hard to see how ModCloth’s quirky styles such as a Hopes and Cheers shirtdress covered with black and white libations, $89; Eclectic Academic blazer with a patchwork of fabrics, asymmetric cut and mismatched buttons, $119.99, and Whisker Takes All denim jacket with white cat eyes and whiskers on the back, $79.99, will fit into Wal-Mart’s bargain-basement price ethos that’s produced $2.87 T-shirts and $1.68 camis.

Wal-Mart has always underscored its commitment to basics, but that mind-set seems to have changed with the retailer now eager to jump on an apparel learning curve. “How will ModCloth fit into our e-commerce business?” the Wal-Mart spokesman said.  “The ModCloth team will continue to operate its site and store [in Austin, Tex.] as a stand-alone and complementary brand to our other e-commerce sites. The ModCloth team will bring its significant experience and unique talents to our U.S. e-commerce efforts and will further strengthen the collective capabilities of the overall team.”

The common thread running through all of the acquisitions is that each e-tailer drills down on a particular category and has a more affluent customer base than Wal-Mart’s target shopper.

“With a lot of these acquisitions, we’re looking for partners that can be additive from the standpoint of product selection and choice, and provide net new customers for the Wal-Mart family. This acquisition is about further enhancing the customer online shopping experience,” the spokesman said.

“Jet attracts a more affluent, more urban and younger customer,” Doug McMillon, president and ceo of Wal-Mart Stores Inc., said Tuesday at the Bank of America Merrill Lynch Consumer and Retail Technology conference. “Some suppliers don’t want to sell on walmart.com but want to sell on Jet.com.”

McMillon explained that Wal-Mart’s recent e-commerce acquisitions have been driven by the web sites’ assortments. “It’s not very complicated; the customer wants great assortment, price and service, and we haven’t been delivering as well. [Moosejaw, Shoebuy and Hayneedle] are great, but they don’t have enough money to go market their brands and scale them. By joining Wal-Mart, they can make their products available through Wal-Mart and Jet and they can scale faster.” 

Wal-Mart seems more eager to develop private-label brands. “We have resourced private brands,” McMillon said. “We have more talent there. We have footwear and apparel — and we’re investing in that.”

“In private label, we’ve grown the expertise and industry relationships with some of these specialty retailers particularly in this category,” the Wal-Mart spokesman said. “The type of content they need to educate consumers to help drive conversion is really important. ModCloth brings that — it’s content is so rich. Customers can schedule one-on-one styling appointments with ModStylists. Moosejaw has similar expertise, it’s so strong and knowledgeable in outdoor and activewear.”

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