What will Walmart gain from its Moosejaw acquisition?

Discussion
Photo: Moosejaw/Facebook
Feb 16, 2017
George Anderson

Walmart announced yesterday that it had acquired Moosejaw, “The Most Fun Outdoor Retailer on the Planet according to our moms,” for $51 million.

The purchase continues a string of recent deals put together by Walmart that has included the acquisition of Jet.com and ShoeBuy.com. Moosejaw, number 261 on Internet Retailer’s top 500, has a significant e-commerce business in addition to operating 10 stores.

Walmart has said that it plans to continue allowing Moosejaw, based in Madison Heights, MI, to operate independently. As to what it expects to gain from its newest business, Walmart has said Moosejaw will provide further access in apparel and accessories, the top selling category in digital commerce.

The acquisition will also open Walmart to relationships with top-notch suppliers that it has not done business with in the past. Establishing those relationships will enable vendors to sell on Walmart’s other e-commerce sites.

Moosejaw also has a distinct branding story that it has taken to social media to grow the business. Walmart expects to learn from how Moosejaw’s team creates content to enhance the customer experience.

For its part, Moosejaw expects to benefit from Walmart’s resources to not only expand its business but reduce operating costs.

“There’s going to be a lot of integration on the backend,” Ravi Jariwala, a spokesperson for Walmart, told TechCrunch. “Things like taking advantage of the bigger scale and leveraging those costs for things like shipping rates, credit card fees, and transaction processing fees.”

While both Moosejaw and Walmart can talk to the benefits of the deal, not all of the outdoor retailer’s largely Millennial customer base is convinced. Most of the posts on the company’s Facebook page were critical of the deal, including this one: “I want to still love you…and let’s be serious, I probably still will because this love runs deep. But really? Walmart? I understand you have your reasons, I know the outdoor retail market is struggling….but I am SO disappointed by this news.”

DISCUSSION QUESTIONS: What will the deal for Moosejaw mean for Walmart? What will it mean for Moosejaw and its loyal customers? What are the implications for competitors of the two companies?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Millennials go to off-price outdoor sites like Moosejaw to outfit themselves for the experiences they so value."
"If allowed to continue to operate independently, Moosejaw can only expand on Walmart’s deep pockets..."
"Moosejaw just became an immediate and viable competitor to Bass Pro Shops."

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20 Comments on "What will Walmart gain from its Moosejaw acquisition?"


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Mark Ryski
BrainTrust

This is a classic build vs. buy question, and Walmart chose to buy. Acquiring strong players in niche markets like Moosejaw provides Walmart with immediate strength in a category they did not have. The challenge is to maintain/grow the brand strength and continue the service that made Moosejaw successful in the first place, while amalgamating it into the Walmart machinery. Some diehard Moosejaw customers have expressed their concerns and no doubt some Moosejaw staff will also likely experience transition pains, but these are risks Moosejaw management obviously felt was worth taking. As for competitors, anytime Walmart enters a category, incumbents should be concerned.

Jasmine Glasheen
BrainTrust
Jasmine Glasheen
Writer, influencer and content marketer
2 years 5 months ago

The Moosejaw acquisition is a new way for Walmart to try to better infiltrate the Millennial customer base. I see this an attempt to up the offerings on Jet.com. Customers won’t be able to ignore Jet when they offer backbreaking prices on outdoor brands like Prana, Northface and Patagonia. Millennials go to off-price outdoor sites like Moosejaw to outfit themselves for the experiences they so value.

Charles Dimov
BrainTrust

With a loyal and engaged customer base, you can only hope that Walmart perceives this as an opportunity to leverage the strength of both brands with an arms-length operating agreement. That means, let Moosejaw continue to operate autonomously from the Walmart machine. Use it as a niche brand that maintains its own culture, customer base and strong branding. Then use the Walmart back-end muscle for better negotiating power with vendors, processing capabilities, omnichannel technologies, etc. Then rebrand the Walmart outdoors section to Moosejaw.

Done right, this could be a very good move for Walmart. The question is, will they cave in to the temptation to keep it as a gem, or just blend it all into one hodgepodge?

Steve Montgomery
BrainTrust

When the buyer states there will be integration on the back-end and doesn’t mention any other changes, they are trying to calm the fears that the employees and the customer base have about the changes that are coming.

Once the acquirer completes the back-end changes it is very hard for them to resist making just a few small changes here and there on the front-end. They say, gee, those worked, let’s just make one or two more.

The end result will be a Walmartized company. For the e-commerce side of Moosejaw’s business that might not matter too much but it will centrally impact their stores.

Max Goldberg
Guest

Will Walmart be successful in trying to implement an Amazon-like approach to buying companies and then leaving them free to operate, while linking back-end operations? I’m not sure they are nimble enough to do this. It’s not in Walmart’s DNA. Loyal Moosejaw customers are right to be concerned.

Bob Amster
BrainTrust

If allowed to continue to operate independently, Moosejaw can only expand on Walmart’s deep pockets, reduced operating costs and multiple e-commerce outlets through which to hawk more product. Walmart gains immediate expertise in a category that appeals to its customer base. The danger is that Walmart may decide to influence the culture at Moosejaw and that would be a mistake because of the brand image and following the Moosejaw has already built.

Camille P. Schuster, PhD.
BrainTrust

What the deal means for both Walmart and Moosejaw customers depends upon how Walmart actually approaches the purchase. There is a long history of large companies purchasing small companies to “learn” from them ending in disaster because the large company imposes its way of doing business. Walmart has great systems and back office practices. Imposing them without learning from Moosejaw first may well eliminate the most important learnings. Walmart needs to move forward carefully for the benefits to actually happen.

Adrian Weidmann
BrainTrust

This was a low-risk acquisition for Walmart. With the recent bankruptcy filing of Eastern Mountain Sports and the one pending (?) of Gander Mountain, this category is being ravaged by online purchases and the merger of Bass Pro Shops and Cabela’s. Moosejaw will provide expertise in this category and benefit from the online expertise that Jet.com brought to the Walmart portfolio. Moosejaw just became an immediate and viable competitor to Bass Pro Shops.

Gene Detroyer
BrainTrust

When it comes to M&A, the key is strategy first.

To simplify the equation, Walmart could pick one of two strategies for the future:

  1. Expand their current business, or;
  2. Find areas outside their current business in which they could apply thier corporate strengths and grow the scope of company.

The answer is pretty clear. The former gets them nowhere is a highly saturated America. The latter, whether applied internationally or domestically, assures profitable and sustainable growth (sustainability being the key). Moosejaw fits this position. We will see more Moosejaws from Walmart.

Tom Redd
Guest

Smart move on both sides. Moosejaw gains from Walmart’s reach and strong systems and purchasing channels. Moosejaw also gains from the massive number of sports-oriented shoppers that are loyal to Walmart and have no ego issues with good prices. Many of these negative Moosejaw fans must not understand that Walmart has a large number of high-income shoppers that just want stores to shop in that have decent prices. Here in Scottsdale our Walmart has loads of $80,000 cars in it daily. Walmart gains from it by satisfying its sports customers and expanding its specialty arm.

Lots of gains with this move and Moosejaw will always be Moosejaw. Come back in three years and see.

Ken Cassar
BrainTrust
Ken Cassar
Vice President, Research, Shoptalk
2 years 5 months ago

Walmart is establishing a pattern of buying an array of established retailers (Jet, Shoebuy, Moosejaw) with existing customers, all of which offer strong value plays. Assuming that Walmart keeps these brand identities intact, the future of Walmart might look like some of the apparel holding companies, like VF and PVH, which could be interesting.

Mohamed Amer
BrainTrust
Mohamed Amer
Independent Board Member, Investor and Startup Advisor
2 years 5 months ago

The typical Moosejaw customer quote says it all, ” … this love runs deep … ” Since its founding, Walmart has appealed to the rationally calculating, deal-seeking side of our brain: from always low prices to save money, live better. With the experiential lifestyle trend and future buying power of Millennials, Walmart is running a huge M&A lab to make changes to the company’s DNA.

The key for Walmart — and for Moosejaw and its loyal customers — will depend on how quickly Walmart internalizes the new retail paradigm represented by the likes of Moosejaw and Jet.com.

Implications for competitors? They’re hoping Walmart’s past success will keep the company from adopting the necessary changes to maintain the company’s leadership into the next decade. However, hoping is not a plan. Competitors need to apply technology to strategically embed their brands in the lives of their consumers and to organize internally around how they can consistently deliver exceptional customer experiences.

Brian Kelly
Guest
2 years 5 months ago

Is Walmart paying $51 million for Moosejaw akin to Amazon opening book and grocery stores? Meaning, Walmart desperately needs to understand up-market Millennial shoppers and it is quicker and cheaper to buy a successful franchise than reposition the Walmart brand. Culturally, Walmart is testing and learning.

Acquisitions are always a cultural risk, hopefully Walmart learned something from jet.com. Unless Walmart screws up, Moosejaw shoppers should not notice anything. Like Trader Joe’s shoppers not feeling Aldi. Hopefully.

Those on notice: Target, REI, L.L.Bean and Amazon. IF Walmart can learn and redeploy, then a better mousetrap just appeared. It all gets down to share of spend. What brands will be most relevant?

As we like to say, “retail ain’t for sissies!”

Harley Feldman
BrainTrust

This can be a tremendous opportunity to Walmart to expand its brand into the Millennial market and change consumers perspective of stodgy Walmart. The challenge for Walmart is to connect the back end systems but to keep Moosejaw “independent” and provide the consumer with its distinct outdoor brand. Acquisitions always need to thread the needle of retaining the acquired company’s culture, but at the same time integrating them into the acquiring company’s corporate culture. This acquisition will be a test of Walmart’s skills and expertise to pull off the acquisition of Moosejaw successfully.

Min-Jee Hwang
Guest

With all of the recent acquisitions made by Walmart, they are on track to becoming a very formidable player in the retail market, both online and physical. The general idea behind all these acquisitions is to immediately bolster a weak category with someone whose strength is in that category and to learn from them. The challenge is to integrate those strengths without diluting their winning formula with their own changes. Walmart has the potential to come out of these acquisitions very ahead if they carefully navigate through the merging process. Competitors have a very real threat to face here should Walmart come out of this successful.

Dan Frechtling
BrainTrust

Walmart needs a change in strategy to overtake e-commerce rivals. After an uncertain commitment online and several changes in personnel and approach, it now needs to act decisively to catch up.

Moosejaw’s founders and investors needed to answer, “What’s it worth to be independent in a consolidating vertical?” The decision centered around whether to take the money or fight on alone. The deal was apparently too good to pass up.

Moosejaw, like ShoeBuy, gives Walmart access to a wider assortment, higher end brands and a higher end customer base. Unlike ShoeBuy, which was rolled up under Jet.com, Moosejaw will retain some independence as a separate unit under Walmart.

Doug Fleener
Guest

But will Walmart executives really be able to not want to play and tinker with their new shiny retail chain? Smart purchase if they can. If not, look for Moosejaw executives and customers to flee … maybe even together.

I also think many of the brands on Moosejaw aren’t happy about this. Sure it opens up new distribution channel, but most of them didn’t need Moosejaw to get in them.

Another story to review in 18-months to see what really happened!

Adrien Nussenbaum
Guest

The synergies between the two companies are not immediately obvious. Perhaps these acquisitions are aimed more at showing a larger % of online revenue for Walmart’s total revenue, given the growth figures for online eCommerce.

Kai Clarke
BrainTrust

Walmart will gain something invaluable from its Moosejaw acquisition: Perspective. This is one of the greatest gaps in Walmart’s model. Walmart doesn’t understand this target market or how to differentiate itself when positioning its products and divisions when addressing this target. This requires a perspective that is outside of the ELP model, while still maximizing Walmart’s core logistics and retail strengths. Pushing the Walmart organization in new directions, while allowing Moosejaw to continue to operate as a wholly owned subsidiary could provide Walmart with a different perspective and team as management starts to populate the rest of the Bentonville organization.

Martin Mehalchin
BrainTrust

Does anyone else find it funny that they spent $3 billion on Jet and only $51 million on Moosejaw. These valuations are based on hype levels, not fundamentals. Looks like they got a good deal on Moosejaw.

wpDiscuz
Braintrust
"Millennials go to off-price outdoor sites like Moosejaw to outfit themselves for the experiences they so value."
"If allowed to continue to operate independently, Moosejaw can only expand on Walmart’s deep pockets..."
"Moosejaw just became an immediate and viable competitor to Bass Pro Shops."

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