Many startups dream of being acquired by a deep-pocketed benefactor, but sometimes the brand reputations of the startup and of the new parent company don’t quite match up. For example, what does the quirky online retailer ModCloth have in common with Walmart? According to news reports, what they have in common is that Walmart subsidiary Jet has purchased ModCloth.
ModCloth fills a specific niche of whimsical and vintage-inspired fashion and accessories, and is also notable for its diverse selection of models. The site encourages customers to post photos of themselves in items as part of their reviews to give shoppers an idea of how an item might fit their body type.
The site is generally inclusive of women who wear over a size 12 in a way that most fashion retailers are not, in that it actually sells items over size 12. Its customers tend to be young, progressive, and feminist.
Employees tipped off Jezebel, providing a recording of the all-hands meeting where ModCloth CEO Matthew Kaness shared the news. Reporter Anna Merlan describes the reaction as “an immediate, audible rustle of dismay” on the recording. Employees knew who Jet’s parent company is.
Modcloth hasn’t shared the news with the public yet; Jezebel reports that employees received offer letters from Jet/Walmart this morning, the deal will close tomorrow, and the company planned to announce the acquisition on Friday. A ModCloth employee told Jezebel’s Merlan that they will receive their first paychecks cut by Walmart this Friday.
“I ask that we keep this within the company, as we usually do,” Kaness reportedly says on the recording. We know about this possible deal two days in advance, which tells you how loyal employees may be to their new employer. He praised Jet, telling employees, “I think there’s a lot of overlap culturally with what they’re about and what we’re about. I think over time this is going to become an incredible marriage.”
While the CEO might be excited about the deal, the reaction among ModCloth fans has been swift and negative. Walmart, after all, is known for punishing employees for anything that resembles union activity, low wages that have risen a bit lately, and the relentless pursuit of lower prices. This doesn’t do much for Modcloth’s sunny feminist indie cred.
This is terrible news. I’ve boycotted Walmart for years, no problem, but boycotting Modcloth hurts
https://t.co/biGUdckUsZ
— sharks (@amillionsharks) March 15, 2017
Walmart acquired Jet, which was losing money at the time, last August for more than $3 billion with the hope of bolstering its e-commerce operations. Since then, Jet has acquired ShoeBuy in turn, and co-founder and CEO Marc Lore said that the company was on the prowl for more e-commerce acquisitions.
What Jet is after, Lore explained to Recode, are “categories where they are long-tail, high-margin products and harder-to-crack brands.” That does sound like the niche vintage-inspired fashion offerings of ModCoth.
Consumerist has contacted ModCloth, Jet, and Walmart about this report, and will update this post when we hear back.
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