business news in context, analysis with attitude

The Wall Street Journal has a story about Walmart's recent acquisitions of small, online niche brands such as ModCloth, Moosejaw and ShoeBuy, and its intention "to let the retailers run as separate entities, the first time it has attempted to build new e-commerce brands in the US."

It may not be quite that simple.

There are advantages for both sides. Walmart, for example, gets access to both entrepreneurial intelligence from these small companies, as well as to brands that might not ordinarily want to sell their products on a Walmart site. On the other side of the ledger, ModCloth, Moosejaw and ShoeBuy, as "part of a growing group of online retailers confronting the challenge of competing with the fast shipping and large assortment of Amazon or increasingly savvy suppliers selling directly to shoppers," get economies of scale and financial resources that can help them grow.

However, there are cultural issues that come into play. For example, "after news of the ModCloth deal surfaced last week, shoppers took to Facebook and Twitter to critique Wal-Mart’s image as out of line with ModCloth’s feminist, socially liberal and plus-size inclusive branding." And while "Moosejaw shoppers’ reaction has been more muted," the Journal reports that there has been some resistance from shoppers who like buying their "gear at local shops that support outdoor enthusiasts," and are resistant to the notion of shopping at Walmart.

Mark Lore, CEO of Walmart's online operations - who came to the company when Walmart bought Jet, the online company he founded, for $3.3 billion - says that much of the bad press about Walmart's corporate values are "unwarranted," and that people "turn the corner" once they've had greater exposure to the company.
KC's View:
The business case for why these acquisitions make sense for Walmart is clear; if offering differentiated product lines makes sense for smaller retailers, it certainly makes sense for Walmart ... though it remains to be seen if some of these companies will align easily with the price-and-margin driven approach that Walmart typically takes.

The biggest challenge, I think, will be resisting the urge to drag these unique retail brands into the Walmart mindset, and just replace the people who resist the diminution of their cultural values. Companies as big as Walmart don't get that way by tolerating resistance, but in the new world order, I think they have to find ways to do just that. I tend to think of Unilever's acquisition of Ben & Jerry's as a good model ... I'm not sure how they've done it, but so far they seem to have done a really good job of nurturing Ben & Jerry's non-conformity and allowing the company to take positions that may make the mother company uncomfortable.

But a little discomfort is good for the soul ... and a little discomfort may actually make Walmart a more palatable retail source for some consumers, and a more palatable retail partner for some brands.