Walmart to Sell ModCloth Just 2 Years After Acquiring the Brand
Walmart is selling off women’s clothing company and online retailer ModCloth, just two years after acquiring it. The brand will now be a part of investment firm Go Global Retail, though it will continue to operate independently. For Walmart, the ModCloth acquisition in March 2017 was part of a larger strategy to ramp up its e-commerce business in an effort to compete with Amazon.com. While some of those investments have paid off — online sales went up 40 percent last year in the U.S. — Walmart's e-commerce division is projecting losses of more than $1 billion this year.
Total Retail's Take: This was a curious pairing from the beginning, and therefore not entirely surprising that Walmart and ModCloth are going their separate ways. When Walmart purchased ModCloth, many of the women's apparel brand's loyal customers felt marginalized. The reason they shopped with ModCloth is that its merchandise couldn't be found at other mass-market retailers, leading to an aura of exclusivity around the brand. Partnering with Walmart was the antithesis of being exclusive. With the loss of ModCloth's core customer base — or a least a segment of it — Walmart was challenged from the beginning to grow the brand into a profitable arm of its e-commerce business.