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Business

Walmart to Acquire Online Men's Clothing Retailer Bonobos

Targeting Bonobos, Walmart tries to compete with Amazon

Bonobos Guideshop financial district location, Monday March 20, 2017 in New York, photo: AP/Bebeto Matthews
6 months ago

NEW YORK – Walmart is buying online men’s clothing retailer Bonobos for $310 million in cash, showing that its appetite for hip clothing brands shows no sign of abating as it looks for ways to gain on Amazon.

It’s a sign of the aggressive direction Walmart is taking since buying Jet.com last year and keeping that company’s founder as head of its online division. Walmart has since bought clothing seller ModCloth, footwear retailer ShoeBuy.com and outdoor gear seller Moosejaw as it focuses on brands appealing to younger shoppers.

Bonobos, which started out selling pants online, caters to male shoppers looking for help putting together a wardrobe.

Targeting Bonobos is a good move for Walmart as it tries to compete with Amazon, which has been quickly expanding its clothing business, says internet consultant Sucharita Mulpuru-Kodal.

“If you roll up enough of these online startups, you create a meaningful share” of business, she said. She noted that Walmart can learn from these millennial customers.

While Walmart keeps trying to compete against Amazon by pushing harder into online, Amazon announced a bold move into brick-and-mortar stores Friday by saying it would buy Whole Foods in a deal valued at about $13.7 billion.

The Bonobos deal, announced Friday, is expected to close at the end of the second quarter or the beginning of the third quarter of this fiscal year. Bonobos CEO and founder Andy Dunn will report to Marc Lore, the CEO of Walmart’s U.S. online operations.

“Adding innovators like Andy will continue to help us shape the future of Walmart,” said Lore. “They’ve created an amazing product and customer experience, and that will not change.”

Bonobos started online but like many similar startups, has also opened some showrooms. Customers at the Guideshops can try on pants, shirts, ties, belts and jackets with suggestions from stylists. They can order online at the store and have their clothes delivered to their homes or office a few days later. The company now operates more than 30 stores in cities like Chicago, New York and Atlanta, and plans to have 100 by 2020. For Bonobos, the acquisition by Walmart will help expand its business.

Still, Mulpuru-Kodal says, it is a bit of “a game of Monopoly.”

“Walmart has huge coffers. Even if one of them shows promise, it pays for the rest,” she said.

Bentonville, Arkansas-based Walmart’s online business is gaining momentum, but remains a distant second to Amazon. It increased 63 percent in the fiscal first quarter, up from 29 percent in the previous period. That marked the fourth straight quarter of gains.

Under Lore’s direction, Walmart also has been working accelerate the integration between Walmart.com and Jet.com, and trying to take advantage of its scale in areas like shipping and sharing its products. Walmart also is starting to offer discounts on thousands of online-only items when customers elect to have them shipped to one of the company’s stores for pickup.

Walmart is also launching an incubator lab focused on projects in robotics, virtual and augmented reality, and artificial intelligence as it aims to compete more aggressively with Amazon.

ANNE D’INNOCENZIO

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