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1) Walmart sold ModCloth two and a half years after purchasing it, which isn’t likely to trigger a comeback for the digitally-native indie brand.

    WHAT HAPPENED: Go Global Retail, a New York-based investment firm, purchased Modcloth from Walmart for an undisclosed amount. The new owner plans to continue running the business while investing in its digital capabilities and analytics.

    WHY IT MATTERS

  • Walmart’s acquisition of Modcloth wasn’t beneficial for either party. As an early player in the digitally-native plus size market, Walmart saw Modcloth as a uniquely positioned brand that would enhance its fashion portfolio. But Walmart’s acquisition devastated many Modcloth loyalists, who thought the brand’s new owner went against the indie brand’s original messaging. While Walmart installed a new leadership team and helped launch an outlet business, these moves ultimately tarnished the Modcloth name and therefore Walmart’s investment.
  • Today, a brand’s value proposition is more important than the brand name itself. Modcloth’s separation from Walmart won’t necessarily enable Modcloth to revive its old value proposition. Over the past two years, the steady emergence of new plus size and direct-to-consumer brands have forced Modcloth to compete for customers that it used to retain with minimal competition. In the past, a brand could rely on its heritage, even as it changed owners, aesthetics or strategies. But as consumers are more educated and have higher expectations than ever before, a brand name tied to a long-gone value proposition isn’t worth much.

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