“I don’t begrudge a company for selling itself, but there’s something particularly egregious about the Walmart deal,” he said. “I don’t like the way they treat their employees or how they’ve put smaller retailers out of business. It’s not a company I want to support.”
As Walmart aggressively buys upscale niche brands, analysts say it’s facing an uphill battle to win over younger, more affluent shoppers across the country. Although traffic at Walmart.com is growing rapidly — 34 percent since last year — the company’s forays into higher-end online brands have been less successful.
Online traffic to Bonobos.com, which Walmart acquired last June, has fallen 12 percent in the past year, according to the most recent data available from ComScore, an analytics firm based in Reston, Va.
The number of monthly visits to other sites recently bought by Walmart has also fallen from a year ago: They’re down 7 percent at outdoor goods site Moosejaw.com and 8 percent at ModCloth.com, according to ComScore data. (Both brands now also sell on Walmart’s Jet.com.)
Walmart, which has become the world’s largest retailer by promising rock-bottom prices, has made sweeping efforts in recent years to move beyond its no-frills image. It spent $3.3 billion buying Jet.com in late 2016 in hopes of winning over the site’s more affluent, big-city shoppers.
It also brought on Jet founder Marc Lore — who previously started Diapers.com and Soap.com — and put him in charge of its online operations. (His pay package last year: $10.1 million.)
“If you think about Walmart’s existing market, it’s totally tapped out,” said Paula Rosenblum, managing partner of the retail advisory company RSR Research. “They need to find new customers, which is exactly why they bought a group of chains that don’t have the Walmart name on it.”
Monthly traffic to Jet.com has fallen 15 percent from a year ago and 32 percent since its $3.3 billion takeover by Walmart in September 2016. That measure has long been a way for companies to gauge their reach and visibility.
David Echegoyen, chief customer officer for Jet.com, said the company is increasing its focus on “urban and affluent” shoppers. The declining traffic numbers, he said, were a reflection of that shift in focus.
“That’s a vanity metric for the outside world; it’s not what we’re focused on,” Echegoyen said. “We’re more focused on the quality of traffic than the quantity.”
The idea, executives said at the time, was to build a collection of higher-end brands that would fall under the Jet umbrella. The company acquired specialty sites in quick succession: ShoeBuy in January; Moosejaw in February; ModCloth in March; and Bonobos in June.
It seemed like a winning strategy: “The Jet customer demographic — millennial, urban, higher-income — aligns well with the demographics of ModCloth and Bonobos,” Walmart spokesman Randy Hargrove told Business Insider last year.
But analysts say well-to-do 20- and 30-somethings in large cities also tend to be sensitive to Walmart’s business practices. The company has long been a target of labor advocacy groups who say its low wages push some workers to turn to food stamps and other public programs to make ends meet. Walmart this year raised its starting hourly wage to $11 from $9, but it still lags behind competitors like Target (where the minimum wage is $12 an hour) and Costco ($13 an hour).
“Walmart bought Jet because they were the best thing they could acquire at the time, but I’m not sure they have the skills to navigate this new reality of increased competition and socially-conscious customers,” said Milton Pedraza, chief executive of the Luxury Institute, a New York-based market research and consulting firm. “You can buy the website. You can buy the talent. But there’s still that basic culture clash.”
Last year, Walmart rolled back its health coverage for workers at Bonobos, ModCloth and other acquisitions, resulting in higher out-of-pocket premiums and deductibles for workers. A Walmart spokesman noted that it has added some benefits for Bonobos workeres, including a 401(k) match and financial assistance for adoption and foster care.
“Walmart is trying to hide behind these new brands — ModCloth, Bonobos,” said Dan Schlademan, co-director of OUR Walmart, a nonprofit group that advocates for higher wages. “But it’s clear that their labor practices have not changed.” (OUR Walmart has an ongoing campaign and website, ModClothIsWalmart.org, aimed at spreading the word that ModCloth is owned by Walmart.)
As a result, some longtime Bonobos customers are scouring eBay for Bonobos shirts to avoid spending money directly at Walmart, while others say they’ve asked local tailors to re-create pants that are starting to fall apart.
“I can’t spend my money at a company that doesn’t align with my beliefs,” said Brian Goodhart, 47, of Charlotte, who used to shop almost exclusively at Bonobos. He now buys most of his clothing from the British brand Ted Baker. The prices are higher — his chinos cost $159 instead of $98 — but the real estate broker says he’s not going back to Bonobos. (Goodhart also avoids Chick-fil-A, whose president has spoken out against same-sex marriage, and Hobby Lobby, which does not offer insurance coverage for employees’ birth control.)
“Walmart is a company that, in my opinion, has abysmal relations with its employees,” he said. “I grew up in a union family, and I think my mother would roll over in her grave if I stepped foot in a Walmart.”
When Walmart bought Jet in 2016, many hailed the deal as transformative. The hope was that the company would help jump-start Walmart’s e-commerce ambitions.
But earlier this year, Walmart chief executive Doug McMillon said Jet’s appeal may be more limited.
“Walmart is just a really well-known brand for value throughout the country,” McMillon said in a February call with analysts. “When you get into Oklahoma, Texas and the middle of the country, it just makes a lot of sense to invest in that brand rather than investing to introduce a brand that’s less familiar.”
Echegoyen noted that for Jet.com, between February and April, there had been a 36 percent increase in repeat customers in the Northeast and a 27 percent rise in new customers in large metro areas where it is focusing marketing efforts.
A year ago, though, Walmart and Jet executives had big plans for Bonobos. Although Walmart didn’t seem like a natural fit for the trendy menswear company, executives said they were hopeful that customers would see beyond the brand’s association with Walmart.
“In some ways, it was a surprise even to me that we chose to take this route,” Andy Dunn, Bonobos’s founder and chief executive, told Fast Company last year. “My fear has been that customer reaction — based on the perception of the Walmart brand — is going to change the nature of Bonobos.”
“I empathize with those customers, but we’ve learned that Walmart has got a number of things in flight that not everybody knows about,” he said, adding that customer boycotts hadn’t had any apparent effect on the brand’s overall performance. Dunn noted that beyond traffic, metrics like sales and average order value are up, though he declined to provide numbers.
Bonobos has seen a rapid expansion of its storefront locations in the past year, from 35 to 53.
“One of the reasons Walmart has acquired businesses like Jet and Bonobos is because they want to develop a premium offering that is very difficult to develop within the Walmart business,” Neil Saunders, managing director of research firm GlobalData Retail, told The Washington Post in February. “But it’s very clear that these are separate vehicles — selling higher-end brands and pushing up price points — that really goes against the fundamental tenets on which Walmart was built.”
Case in point: $48 Bonobos T-shirts and $149 ModCloth dresses are a far cry from the clothing offered on Walmart.com, where T-shirts were recently marked down to $4.48 and women’s dresses were priced at less than $6.
Bonobos got its start as a purveyor of chinos for young, in-the-know professionals. Much of the start-up’s appeal, branding experts said, was that it was an independent company that knew how to have fun. Product names included Graham Slackers and Cappu Chino.
“If you fell in love with Bonobos, it was because you’d discovered a new brand that felt cool,” said Kate Newlin, a retail branding consultant. “But now that’s gone. It’s no longer your discovery — it’s Walmart’s.”
She added: “The kind of customer that likes these brands is also reading the business page, so there’s no hiding that it’s now part of Walmart.” (Though, she said, it’s not for lack of trying: The words “Walmart” and “Jet” are conspicuously missing from Bonobos.com.)
Back in Vermont, Bush is down to his last pair of Bonobos jeans.
“My wife and I have had several arguments over this,” he said. “She’ll say, ‘Why don’t you just go back to Bonobos and buy the jeans that you love?’”
“But,” he added, “I’m staying away on principle.”