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Walmart is acquiring a lot more than Bonobos

Walmart is acquiring Bonobos, the menswear site, for $310 million. In honor of the 30th anniversary of the GIF, let me use one to communicate my reaction to this new partnership:

And that’s coming from me – someone who loves all things retail, particularly when they involve dapper men in suits.

My underwhelming reaction is due to the fact that this is one of many online retail acquisitions Walmart has shepherded over the last few months. For starters, it acquired ModCloth in March, as well as Hayneedle and ShoeBuy, and in February it acquired Moosejaw (an outdoor apparel company – not a dental insurance agency for moose). It also acquired Jet.com for $3 billion in 2016.

Although this acquisition may not come as a surprise, Walmart’s transition towards online retail does remain a strategic one. As DisCo has previously noted, retail closings are expected to break a 20-year record in 2017, topping 6,000 unit closings. E-Commerce, conversely, is surging, with sales totaling almost $400 billion in 2016. Though this is a small percentage of the total retail revenue, it reflects a broader movement that doesn’t seem to be wavering.

And yet, we are not seeing companies adopt digital platforms in lieu of traditional storefronts. Rather, a hybrid model, that offers the immediacy of brick-and-mortar with the efficiency of e-Commerce, is all the rage.

Walmart’s acquisitions seem to reflect this hybrid strategy. Although it closed 269 stores globally last year, including 154 in the United States, the company is also set to open 405 stores this fiscal year. At the same time, Walmart reports that e-Commerce sales were up 63% in the previous quarter, with “the majority coming from organic growth in Walmart.com”.

While Walmart’s Bonobos acquisition may reflect continued efforts to merge e-Commerce with the traditional retail experience, underlying this may be a broader effort to shake up the retailer’s ‘mom-and-pop’ persona.

After Walmart’s acquisition of ModCloth in 2016, TechCrunch noted: “Bonobos and other fashion purchases that Walmart has made … are not known for cut-price goods.” Rather, while Walmart’s success is largely tied to offering low prices on all-purpose products, Bonobos advertises upscale, specialized clothing no matter one’s shape or size.

As they maintain on their site, “We’ve made adjustments to ensure all our pants will fit you no matter your body type or style.” In contrast, Walmart’s first tagline was “Always Low Prices,” and, as of 2008, is “Save Money.”

ModCloth, the San Francisco based clothing company, may have held a similar appeal. The company, much like Bonobos, prizes itself on offering products for different types of consumers. Their advertising reflects this ideology; they use a variety of sized models and refuse to retouch or alter photographs.

It’s clear Bonobos and ModCloth are not appealing to consumers by offering the lowest prices. A cursory scan of the price of their products can confirm this. No, they offer a different persona — one rooted in social conscience and self-expression.

This message is, in part, due to the personalization these sites offer. That is, by displaying untouched photos of models of different sizes, and by allowing consumers to tailor clothing to their measurements, ModCloth and Bonobos present a message of inclusivity and, at the same time, appeal to consumers every shape/size.

For example, in a statement about style inclusivity last year, ModCloth reported that, “by integrating all of our styles into one shopping experience, we took a stand that style is for everyone and every body.” Bonobos’ popularity is similarly rooted in this “every body” message, though is communicated not via advertising but in its customer service’s commitment to perfect fit regardless of size, height, weight, etc.

This socially conscious persona may be a primary reason for these companies’ success according to recent studies that report companies with social responsibility aspirations are more appealing to consumers. In fact, in surveying more than 30,000 consumers in 60 different countries, researchers found “more than half … said they were willing to pay more money for a product or service from a company with a commitment to positive social or environmental impact.” This number – 55% to be exact – is expected to continue rising.

Although Walmart remains a leader in physical retail, finding ways to appeal to consumers is crucial, especially as other e-Commerce competitors continue to expand on and offline. Expanding the company’s footprint to serve customers outside of Walmart’s traditional base is certainly a good place to start.

Innovation

New technologies are constantly emerging that promise to change our lives for the better. These disruptive technologies give us an increase in choice, make technologies more accessible, make things more affordable, and give consumers a voice. And the pace of innovation has only quickened in recent years, as the Internet has enabled a wave of new, inter-connected devices that have benefited consumers around the world, seemingly in all aspects of their lives. Preserving an innovation-friendly market is, therefore, tantamount not only to businesses but society at large.