Walmart wants to win over millennials, but it might have to acquire ’40 to 50′ brands to do so

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  • Walmart is focusing on acquiring more specialty brands like Bonobos and Modcloth.
  • According to analysis from financial services firm Cowen and Company, these acquisitions will help the company attract millennial customers.
  • Walmart’s e-commerce president and CEO Marc Lore has said the specialty acquisitions would also help the company “create a reason for customers to shop” at Walmart over their competitors in the future.
  • Still, Lore estimated that Walmart will need to acquire at least 40 more brands going forward.

Walmart is on a mission to win over millennials and brand-conscious shoppers.

Its secret weapon is acquiring specialty brands like Bonobos and Modcloth.

But, according to a recent report from financial services firm Cowen and Company, the battle of the brands isn’t over yet.

Cowen’s analysis was based on a meeting with Walmart’s e-commerce president and CEO Marc Lore. The report said that while the company “has acquired a handful of successful digitally native retailers,” it’s Lore’s view that Walmart “will need to acquire at least 40-50 brands that resonate with millennials to help lift the margins in the long-tail.”

Lore’s comments to Cowen mirror his statements at an October 16 meeting with investors. At the meeting, Lore said that in the future, major retailers will largely sell similar products, so differentiation will be the key to success.

“How do you actually create a reason for customers to shop on your website versus your competition?” Lore said at the meeting with investors. “And I think this is one way. This is one big way, having proprietary content. It’s not going to be just four brands aren’t going to do it, but imagine 40. So the idea is over a long period of time to continue to incubate and buy and build. So we have a portfolio of brands and unique content.”

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A Walmart spokesperson also told Business Insider on Monday that “one of the drivers for customers to continue coming back to your brand is going to be finding products and experiences that they just can’t get anywhere else.”

But the retail giant is already well on its way, having acquired apparel brands Bonobos, Modcloth, Moosejaw, and Eloquii. Other major acquisitions include e-commerce company Jet.com, media technology company Vudu, and delivery startup Parcel.

Cowen’s report said that “a combination of partnerships, acquisitions, and investments in category specialists” will help Walmart combat Amazon. And, according to the report, Lore said that Walmart’s specialty acquisitions have improved product assortment and content overall.

According to Cowen, Walmart has avoided harming its acquisitions’ brand recognition by maintaining the direct-to-consumer channels of its digitally native brands – meaning shoppers still go to Modcloth or Bonobos to shop, rather than Walmart’s site.

Lore told Cowen that while news of several brand acquisitions generated a few weeks of negative press, brands like Bonobos are still performing well and gaining customers.

The Cowen report said that the brand’s ongoing mergers and acquisitions will prioritize “specialty retailers and digitally native brands” that will allow Walmart to “gain sustained momentum.”

Source: Business Insider

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