At the height of their love affair, Bridget Henry visited online clothing store ModCloth’s app every day. It wasn’t just the clothes with a vintage and quirky vibe that the 26-year-old liked; it was the story.
Founded by high school sweethearts in a college dorm room, the San Francisco company had grown on the backs of its loyal customers to $150 million in revenue in 2015. Henry liked how genuine the brand seemed. That is, until it was purchased by Wal-Mart Stores Inc. in March.
“I shed a little tear when I deleted the app. I felt like I was breaking up with someone,” the supply chain analyst said.
Wal-Mart is aggressively expanding its e-commerce clout. The retailer purchased e-commerce site Jet.com last year and is offering free shipping and discounts on Walmart.com as it bulks up to better battle with online shopping giant Amazon.com.
But even Wal-Mart e-commerce communications Vice President Dan Toporek acknowledges that Walmart.com and its massive inventory of 50 million distinct products will not attract the cool kids who are — or were — shopping at places such as ModCloth.
Analysts see a trend with Wal-Mart’s recent buys.
It snapped up online footwear shop Shoebuy.com at the end of 2016, and then bought Moosejaw, an upscale online outdoor gear site, for $51 million in February. After paying an estimated $50 million to $75 million for ModCloth, Wal-Mart purchased Bonobos, a New York-based site selling offbeat but slick menswear, for a cool $310 million in June.
Investment firm RZC Investments, which is independent of Wal-Mart but is owned by late founder Sam Walton’s heirs Steuart and Tom Walton, bought premium cycling clothier Rapha for $260 million earlier this month.
Online cosmetics retailer Birchbox is also reportedly in talks with Wal-Mart. Birchbox and Wal-Mart declined to comment.
Wal-Mart hopes to leverage the popularity of these niche, trendy sites with subsets of consumers who wouldn’t be caught dead in a Wal-Mart store. And the kids are not having it.
ModCloth and Bonobos are being cyberbullied by their fans online, who are making fun of the brands for what they see as selling out to the corporate machine.
“The thing I loved about ModCloth is that I knew the clothes I bought there couldn’t be found at Macy’s and weren’t worn by the masses,” said Connie Warner, who started a Boycott ModCloth page on Facebook. “No more. I’ve unsubscribed from their emails. I refuse to shop at a store owned by Wal-Mart.”
It’s not just the potential style-cramping by Wal-Mart that is driving the protest.
Haley Pollock, another ModCloth shopper, said she won’t support a company whose owner has a reputation for controversial workplace and corporate practices.
Wal-Mart has been accused over the years of discriminating against minorities and women, paying low wages, being anti-union, maintaining poor environmental standards and buying products from foreign suppliers that mistreat workers. Wal-Mart has denied violating laws or knowingly doing business with suspect suppliers.
