By taking a hands-off approach to the digitally native fashion brands it’s acquired since early 2017, Walmart is winning new partners and planting a firm foot in the extended-size market.
On Tuesday, Walmart announced plans to acquire Eloquii, the plus-size women’s fashion brand launched in 2011, for an undisclosed amount. The deal is reportedly worth $100 million and is expected to close later this quarter.
With the investment, Walmart is building on its goal of developing a portfolio of exclusive direct-to-consumer brands, thus elevating Walmart’s category expertise and assortment. In doing so, it gains access to, and trust-by-association-with, a group of shoppers who may not have considered Walmart as a fashion source in the past, said Sarah Engel, CMO of retail analytics company DynamicAction. It also gives them enhanced data, understanding, reach and inventory suited to a growing demographic.
For Eloquii, the acquisition will allow it to leverage Walmart’s experience and scale to provide its on-trend looks, including a recently expanded workwear selection, to more women wearing a size larger than 12. A blog post by “The Eloquii Team” on Tuesday stated the company is ready to “grow grow, grow” as a result of the business deal.
Judging by the status of the retail giant’s prior fashion company acquisitions, Eloquii’s excitement is warranted.
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Bonobos, for one, has seen great growth and customer support (post the initial backlash, that is) since Walmart scooped it up in June 2017. Speaking at a Glossy conference on Monday, Bonobos’s newly appointed CEO Micky Onvural said that, since she rallied the organization around a new direction in early 2017, Bonobos — first launched in 2007 to offer better fitting pants — has seen average sales across categories multiply by 10 times. (It recently added underwear and socks to its assortment, which also includes dress shirts, suits and blazers.) Walmart doesn’t break out earnings by brand, but overall, according to its earnings report, e-commerce sales, were up 40 percent year-over-year in the second quarter. In addition, Onvural reported an 83 increase in favorability toward the brand and a 36 percent increase in intent to purchase in the same timeframe.
In addition, the brand’s mission of making “fit happen for every body” has progressed uninterrupted, though established before the deal, said Onvural.
“We’re running very much as a standalone company; I’m running the business and doing what I think is right for our audience and our business,” she said, though acknowledged that some controversial Bonobos campaigns — including one last year, centered on male role models and featuring a variety of men, including a transgender athlete, a former convict and a gay couple — have “raised a few eyebrows” among parent-company execs. “But they really believe every brand needs to stand on their own and build that connection with their audience.”
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She said, as a brand, “you have to create a movement.” For Bonobos — founded by Andy Dunn, named svp of digital consumer brands at Walmart U.S. eCommerce in 2017 — that’s linked to the DNA of the brand. Bonobos has always been centered on evolving the “one-size-fits-all” notion of masculinity, she said.
“The best brands in the world have found a way to lean into the cultural zeitgeist,” she said, later adding, “What struck me when I interviewed with Andy — and what made me move myself, my husband and my three small children across the country — is that he is a feminist, and he is very proud to call himself a feminist.”
A theme of equality plays out in Walmart’s fashion acquisitions to date: They have largely focused on related categories of men’s and women’s clothing in inclusive sizes. In March 2017, Walmart announced it purchased ModCloth, which offers most of its women’s styles in sizes extra small to 3X, for nearly $75 million.Antonio Nieves, who joined ModCloth as CEO in March, is similarly positive when he talks about how things have gone since the acquisition. In July, Modcloth CEO Antonio Nieves told Quartz that Modcloth shoppers have since been buying more clothes and spending more per piece. Soon after, Walmart announced a $310 million buy of Bonobos, known for an expansive size range: It’s long been offering 172 size and fit combinations in its pants styles, though recently expanded to almost 200. Unlike Amazon, which has earned a reputation for launching private-label brands to fill white space — or take market share — Walmart has instead taken to acquiring brands with stakes in desired market segments.
“What makes a digital brand great is how it converts a pain point in the market into a source of delight for the customer,” said Dunn, in a Walmart.com blog post on Tuesday.
Indeed, Eloquii has much experience catering to its customer, looking to their feedback — both direct and indirect, in the form of popular purchases — to inform everything from product development to marketing strategy. Likewise, between 2016 and 2017, Bonobos surveyed its customers on what fit means to them, going so far as to invade their closets and go shopping with them to paint a fuller picture of what they’d rather be wearing, Onvural said.
Plus-size women’s fashion represents one of fashion’s fastest-growing segments, valued at $21 billion, and more than half of U.S. women ages 18 to 65 wear a size 14 or larger.
“Inclusivity in sizing is not just another industry trend,” Engel said. “As an industry, we talk a lot about ‘customer centricity’ — providing the sizes, the fit and the quality your customer expects and deserves is paramount to fashion retailers succeeding in the years ahead. This is not a subsegment or outlying market, but the core of U.S. apparel consumers, in every market that Walmart operates and online.”
The acquisition means Eloquii will no longer be independent, but it’s not new territory for the brand: It was launched by The Limited before being scrapped two years later, re-emerging in 2014 as an independent, digital-only label. It now sells in its five experiential retail stores, as well as its own e-commerce site, plus it has wholesale partnerships with Stitch Fix, Dia & Co. and Rent the Runway. It’s seen 300 percent revenue growth since 2015, according to Walmart.
Propelled initiatives and production are to be expected, but Eloquii won’t see changes across the board, especially if partnerships to date are any indication. Its operations and staff of around 100 will remain based in Long Island, New York and Columbus, Ohio. The company will join Walmart’s e-commerce organization, one of the largest e-commerce organizations in the world, with an online boutique. CEO Mariah Chase will report to Dunn.
But maintaining its consumer-facing identity amid a drastic shift in company culture is set to prove a challenge, Engel said. And it will have to uphold its established brand promise by maintaining the quality, selection and reliability shoppers have come to know.
Competition in e-commerce is steep. In 2018, Amazon’s fashion sales will exceed Walmart’s for the first time ever. According to Jim Fosina, founder and CEO of Fosina Marketing Group, Walmart’s Eloquii acquisition is a direct play to even the playing field, and he predicts Walmart will work with the designers at Eloquii to build more sub brands and expand their overall footprint within the plus-size market.
“This move is a leading indicator that Walmart is serious about narrowing the online/direct-to-consumer gap between themselves and Amazon,” he said.
