Will the Bonobos acquisition give Walmart a fashion edge?
Overshadowed by the Amazon/Whole Foods deal, Walmart on Friday reached an agreement to acquire men’s retailer Bonobos for $310 million, its biggest acquisition since Jet.com.
Founded in 2007 as a pure play e-tailer, Bonobos is perhaps best known for opening “guideshops” where consumers can’t purchase anything right off the floor. Customers see and try product, get fitted, and arrange to have items mailed to them. Starting with chinos, Bonobos has extended to suits and other men’s clothing. It has 35 physical stores as well as boutiques inside Nordstrom.
With the deal, Walmart will also gain Bonobos CEO and founder Andy Dunn, who will oversee Walmart’s “collection of digitally-native vertical brands.” Besides Bonobos, they include women’s retailer ModCloth, outdoor retailer Moosejaw and Shoebuy — all e-tailers acquired by Walmart since last August’s $3.3 billion Jet.com acquisition.
Mr. Dunn will report to Marc Lore, Jet.com’s founder who heads up Walmart’s e-commerce business.
Walmart’s acquisitions of Jet.com and niche direct retailers are seen as ways to help compete more effectively with Amazon online, and its online business is gaining momentum. Online sales catapulted 63 percent in the first quarter, with most of the gains coming from Walmart.com.
Under Mr. Lore’s leadership, Walmart has added significantly more items online, introduced free two-day shipping with minimum purchase, and now offers discounts for BOPIS.
Bonobos as well as its other niche vertical brands will be offered on Jet.com and “possibly other Walmart brands in a variety of countries over time.” But the main benefit of adding niche brands such as Bonobos is to gain a better reach and understanding of younger, urban and more upscale consumers.
TechCrunch’s Ingrid Lunden saw Amazon’s move to tap Whole Food’s premium positioning as similar. She wrote, “In both cases, Amazon and Walmart have built reputations on being super competitive (read: cheap) on pricing, but they both appear to be turning a new leaf with their new waves of business.”
One risk is whether any the smaller brands being acquired will lose their cool under Walmart ‘s ownership.
- Walmart to Acquire Bonobos and Appoint Andy Dunn to Oversee Exclusive Consumer Brands Offered Online – Walmart
- Walmart to buy Bonobos for $310M as it doubles down on fashion – TechCrunch
- Walmart to Buy Bonobos, Men’s Wear Company, for $310 Million – The New York Times
- Walmart acquires menswear online retailer Bonobos – USA Today
DISCUSSION QUESTIONS: Is acquiring Bonobos a big deal for Walmart? What potential benefits as well as risks do you see from its stockpiling of niche direct brands?