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.

2) Burberry partnered with The RealReal to promote a circular economy, but while the initiative will attract customers to its stores, it’s a short-term solution to a long-term problem.

WHAT HAPPENED: Resellers who consign Burberry items with The RealReal will get a personal shopping experience available at Burberry’s 18 stores across the U.S.

WHY IT MATTERS

  • Burberry’s initiative promotes consumerism more than it encourages a circular economy. As it stands, the incentive to consign isn’t compelling since a personal shopping appointment is table stakes and typically available to any potential luxury client. Burberry’s initiative is more focused on driving traffic in-stores than promoting healthier consumption habits.
  • Luxury brands should skip the middleman and build the internal resale infrastructure themselves. If Burberry was truly dedicated to cultivating a circular economy, it would manage the resale of its products internally. This would require a serious investment for Burberry, but it would give the brand full control over its product from a sustainability standpoint and would award Burberry longer lasting acclaim and publicity. While a brand-owned resale platform doesn’t present the same variety that The RealReal, Rebag or Kardashian Kloset offer, it would inspire a sense of brand loyalty in the resale category, making it a destination for Burberry afficianods while attracting customers to stores in a more organic way. The fact that Burberry is one of the top brands on The Real Real means that it has leverage.

3) Stitch Fix now allows users to buy individual items, which it thinks will drive customer acquisition, but the new strategy is more beneficial for current members.

WHAT HAPPENED: Stitch Fix introduced two new features that allow members to purchase stand-alone products directly from its website. Up until now, members could purchase only the items included in their monthly “fix.” Shop New Colors lets customers buy previously purchased items in new colors and Shop Your Look features accessories to complement previous purchases. Customers are shown between 30 and 40 items at a time for both new features.

WHY IT MATTERS

  • The potential of these features is contingent on past user data and products purchased from a previous “fix.” While a style quiz is a prerequisite for a Stitch Fix member, a new user doesn’t have the purchase history required to make the algorithms work at their full capacity. If the goal of the new ecommerce features are to grow the Stitch Fix user base, Stitch Fix should implement new forms of data collection that can offer equally-impactful product curations to both new and existing members.
  • Individual purchases will still give Stitch Fix even more user data to better serve its members. One of Stitch Fix’s biggest assets is its brand partnerships and extensive product offering. Granting customers full access to its inventory, even for a limited period of time, would collect a treasure-trove of data and would likely attract new members, versus limiting the search functionality in a number of ways as it currently does. With more customer insight, Stitch Fix can enhance its user experience and better serve its community while still enabling a common and important shopping behavior.

4) Zulily will launch a price comparison tool to showcase its aggressive pricing, but it risks moving the flash sale site further from its original value proposition.

WHAT HAPPENED: Zulily will show price comparisons for similar items sold on Amazon and Walmart’s websites. The retailer guarantees to match the competitor’s price if it’s lower.

WHY IT MATTERS

  • Zulily’s new pricing tool won’t significantly increase its popularity. As the flash sale format continues to lose steam, Zulily has consistently struggled to grow since 2015. While price is a key attribute for modern consumers, convenience is Amazon’s number one driver and therefore remains crucial, even for companies like Etsy that are making it a larger part of their value proposition. Without free shipping and with normal lead times running five to six days, Zulily is playing a game with Walmart and Amazon that it can’t win —consumers will often overlook a small price variation for convenience.
  • A price war is a dangerous move for Zulily as Amazon and Walmart would clearly win. A pricing war would be more detrimental to Zulily than to Amazon or Walmart as the larger retailers have much more scale and runway to sustain thinner margins. Zulily’s efforts would be better spent shifting away from the flash sale method toward a new format that speaks to bargain hunters in a unique and unprecedented way. Rather than call attention to pricing difference, the retailer should focus on the categories it started with—family and children’s products—and try to deliver the best value proposition it can.