News broke this week that Walmart bought curvy girl favorite ModCloth as part of its move to position Jet.Com as a major Amazon competitor.
— Noelle Downing (@NoelleBlog) June 20, 2016
The blog Jezebel noted that ModCloth employees were called in for meeting and told that their paychecks would soon be coming from Walmart.
ModCloth’s is a women’s retailer known for celebrating size diversity. It is not uncommon to see ad campaigns for the clothing company featuring models of all sizes side by side. In 2015, the company announced on their style blog that they were officially retiring their plus size section stating, “we could all agree that shopping categories should be defined by types of clothing, not types of bodies.”
— UNiDAYS US (@UNiDAYS_US) February 10, 2016
Through embracing body-positive practices, ModCloth quickly became a favorite of the curvy girl fashion movement that plus size millennials embraced on Instagram and Pinterest.
That 70's glow is shining bright on our retro-meets-modern capsule collection with Wrangler (coming soon). In Austin for SXSW? Come to the ModCloth Store 3/12 for a ModCloth & Wrangler open house! * #ModClothATX #ModClothxWrangler #SXSW
A post shared by ModCloth (@modcloth) on
On the surface, the ModCloth buy may seem atypical for Walmart. However, the company has been slowing purchasing smaller niche e-commerce brands such as footwear and accessories site ShoeBuy as part of an overall aggressive strategy to cut into Amazon’s stranglehold on retail. The Shoebuy purchase was made to compete with Amazon’s Zappos brand.
— ShoeBuy (@shoebuy) June 15, 2016
Walmart’s ModCloth buy goes after one of Amazon’s major weaknesses, which is a unique women’s apparel brand that appeals to a younger demographic. With featured companies such as Halston Heritage, Lacoste, and Calvin Klein, Amazon’s current catalog of women’s fashion tends to skew older and affluent. Walmart’s market strength has always been in providing inexpensive brands for people outside of metropolitan regions. The ModCloth buy broadens the reach of Walmart’s existing customer base.
The sale of ModCloth comes at a time when the company is coming off of a widely-publicized downturn that had investors worried about its long-term prospects.
Featured frequently on NBC’s The Today Show, ModCloth built its brand on the retro revivalism favored by celebrities such as Zooey Deschanel and Taylor Swift in the early years of her career.
Founded in 2002, the Pittsburgh-based company was the brainchild of Susan Gregg Koger and Eric Koger. The pair, now based in Los Angeles, nurtured a company they started as Carnegie Mellon Students into what was thought to be a global success story with over $150 million in sales in 2014. However, there were signs that the company was struggling.
— Exciting Commerce (@excomm) March 15, 2017
When Matt Kaness took over as ModCloth’s CEO in 2015, he had goals for massive expansion. According to Bloomberg, Kaness put into place sales initiatives to double ModCloth’s earnings potential. However, the company failed to meet those ambitious sales goals, and cracks began to appear in the once promising retailer’s veneer.
Though the company had decent earnings, there were several setbacks which ultimately led to the Walmart deal. As TechCrunch reported, ModCloth laid off nearly 15 percent of its employees in 2014. The company has also had to deal with a changing aesthetic in millennial fashion, which is embracing a different kind of retro with the nineties inspired pastels and grunge apparel.
— Mode By Cece (@ModebyCeCe) March 3, 2017
ModCloth’s vintage-style aesthetic may not provide the most trendy clothing in the marketplace; however, they remain a staple for many young women due to their innovative advertising strategy which incorporates real-life customers into its marketing. For instance, ModCloth’s website features a modern style gallery where consumers can upload pictures of their outfits.
— Retro To Go (@RetroToGo) March 14, 2017
Another feature that makes ModCloth a go-to option for women is their emphasis on layering, which is an evergreen style option frequently adopted in-between seasons that isn’t dependent on trends.
— Christina (@bgbychristina) March 14, 2017
ModCloth’s intimate relationship with its clientele may cause problems in the future for Walmart. For many, news that the body-positive ModCloth would be joining Jet.Com is a sign that the indie clothing line has sold out by embracing a corporate brand. Indeed, as news spread of the sale, ModCloth’s loyal customers began expressing their displeasure online.
This is me reprimanding Modcloth for letting itself get acquired by Walmart pic.twitter.com/olZbDW580p
— Jennifer Hinojosa (@jennhinojosa) March 17, 2017
— ????kiersi???? (@kiersi) March 18, 2017
As an online backlash builds against both ModCloth and Walmart, it remains to be seen if there will be any impact on sales. To get ahead of a potential boycott, ModCloth co-founder Susan Gregg Koger released a statement reaffirming that the clothing company would retain their current website in addition to appearing on Jet.com.
[Featured Image by Lucas Dawson/Getty Images]