Brand investment platform Go Global recently announced it had closed its acquisition of women’s retro fashion brand Modcloth from Walmart, announced last fall, with financing from Tiger Capital Group.
There has been talk of the retail giant considering selling another one of its digital native acquisitions of the past few years, as it struggles to put its ecommerce business into the black. Acquired men’s fashion brand Bonobos recently went through a wave of layoffs, and women’s plus-size seller Eloquii is reportedly unprofitable, according to CNBC.
To learn more about Go Global, its rationale for acquiring Modcloth and its plans for the brand, Multichannel Merchant spoke with Go Global managing director Jeff Streader.
MCM: Tell us a bit about Go Global and its operating model.
Streader: Despite the good intentions of companies and the rest of the industry, private equity is often driven by increasing EBITDA at the expense of the brand. My feeling is, even though it’s important to be profitable, the strength of a company’s balance sheet and income statement are also driven by how strong the brand is and its connectivity back to the consumer.
We started Go Global in 2017 based on the thesis that with our sector experience in retail apparel, our team will acquire brands that are focused on building a single user profile and a brand narrative with product, and the profitability will follow. There are many private equity firms that are very successful. Our point of view is putting the brand and the customer on top.
MCM: What will be your focus with Modcloth going forward?
Streader: We gave back leases to Walmart at four retail locations in Soho in New York, Georgetown in Washington, DC, Austin and San Francisco, getting out of the bricks business. We also closed the wholesale business with Nordstrom and others.
We’re going to focus on our own DTC online business only, and on building a relationship with her, understanding her needs and demands, and supplying the right product at the right velocity. The company had not been doing that; the velocity of product drops and innovation to the website was not at the level it needed to be.
MCM: How does voice of the customer and social listening factor into your plans for Modcloth?
Streader: We don’t want a Macy’s model, we’d rather sell out and have a scarcity model. We have very loyal customers who are strong in Pinterest, Instagram and Facebook; the social footprint is impressive. They’re asking for newness and innovation, so we’re not doing any immediate changes to the procurement and product model or the depth of SKUs.
We want to listen to her, engage her to tell us what she likes about the brand. It’s fashion from the 1960s through the 1980s, but she still wants us to bring her newness. We’ll let her tell us the roadmap and not vice versa.
MCM: what sort of management changes are you making?
Streader: Go Global has people with considerable experience in marketing, technology, infrastructure, ecommerce, product design, supply chain and operations. At acquisition, we dropped five people immediately inside to augment and assist the current management team while we’re in discovery mode, crafting and implementing our strategic plan in the first 100 days.
There were some members of (Modcloth) management who left, with deep ties to Walmart, including the CFO. We prefer to keep as much of management as possible, because of their history and institutional model. Many of the middle managers we have found are really passionate about the brand.