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Cut From Different Cloths: Walmart Buys Modcloth

Any startup I can think of, other than, maybe, Snapchat has hopes of being picked up by a larger business, with very, very deep pockets. There are numerous occasions, however, when the brand reputations of both companies don’t quite match up, leaving people a bit confused, angry, and scared.

In recent news, people are asking what the eccentric, unconventional online retailer, ModCloth, has in common with… Walmart? According to breaking news reports, the answer to this question is that Walmart’s subsidiary, Jet, has purchased ModCloth.

The Consumerist tells us that 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 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.

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.

ModCloth, Jet, and Walmart have all been contacted about this report, and we will update you all if anything is responded to, or further released.

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