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Why Walmart is Making All of These Acquisitions

By: Brittany Engelmann-- 2017-05-15 5:05 am --

It seems like you’ve been hearing about it for years.

Retail is an industry at risk. Sales are declining. Jobs are being shed. Consumers get what they need on the internet.

It’s true. The business is changing. But it has been for years — look where you are right now, reading the site of one of the largest wholesalers in the world. And the smart companies keep up.

That’s what’s behind Wal Mart’s recent un-Walmart like behavior. The powerhouse retailer known for it’s low prices, efficient supply chain and, well, let’s face it, less than hip clothing, has been snapping up online brands that are slick and fashion forward.

  • ModCloth, a fashion forward women’s brand that offers clothing, shoes and handbags aimed at 18-35 year old women.
  • Jet, a hot e-commerce company that launched soap.com, wag.com and diapers.com
  • ShoeBuy, an online shoe store known for its slick content.
  • Moosejaw, an outdoor gear company popular with millennials.
  • Bonobos, one of the hottest men’s retailers, known for their colorful pants.

These all companies that Walmart has snapped up in recent months, or plans to. Each of these share a definitively younger trend, trend setter values and a strong online presence.

A lot of folks are asking: what the heck is boring Walmart doing getting together with these hipsters?

The answer, of course, is Amazon.

Walmart has identified its competition for the next few decades and they know they have to diversify to compete. That means doing things that are contrary to Walmart’s history, like trying to attract affluent online consumers who are interested in being hip.

But if you peel back the lid a bit, you’ll see that Walmart’s deals hew closely to their ideals and their foray is strategic and not intended to disrupt their core brand.

The company started its acquisition spree with Jet.com after announcing strategic business plans to move into the e-commerce space. And while Jet is definitely a hip property, take a read of this analysis.

Jet’s founder, Marc Lore, an e-commerce veteran who co-founded Quidsi (Diapers.com, Soap.com, etc.), aimed Jet.com to compete directly against Amazon.com, undercutting its prices by providing bulk discounts. Walmart acquired Jet.com in part to reach new customers. Jet.com attracts “urban Millennials” while Walmart has attracted shoppers with low prices and a variety of pick-up options.

See that? Jet is a company built on bulk discounts, just like Walmart. And they were already trying to take on Amazon.com, so the acquisition becomes a partnership.

The other pieces that Walmart picked up (ShoeBuy, ModCloth, etc) now operate under the Jet subsidiary, and give it ammunition to take on Amazon directly. ShoeBuy can compete with Zappos.com for shoe buyers, and few will ever know that it’s Walmart and Amazon (their parents) duking it out for your shoe dollars.

What can you, the humble retailer, learn from the competition between these behemoths?

Quite a bit.

Here are three good takeaways.

  1. Have a Mission Statement and Live It: Wal Mart is able to expand and shape shift because its core philosophy is sacrosanct: deliver low prices through supply chain management. They’re sticking to that script and taking the philosophy of precision efficiency to the internet.
  2. Don’t Be Afraid to Try: Lot’s of tech firms talk about failing fast. In retail, it’s more about growing strategically. Keep your eye on trends and don’t be afraid to latch onto the next big things. But make sure that it’s a fit for you and that the newest trend doesn’t impact your brand promise in a negative way. Look for symbiosis.
  3. Stay Competitive: Walmart sees the future and they’re not running from it. The internet is disrupting many businesses, but they believe they can win it. You should feel the same way. Stay in touch with your market and super-serve it, because sometime relevance is a greater return than short term capital.