What Andy Dunn’s Walmart Exit Says About The Retailer’s Future

Bonobos founder Andy Dunn’s LinkedIn post on Thursday, “A Love Letter to Walmart,” in which he revealed that he will remain in the employ of the world’s largest retailer only until early 2020, said volumes about how Walmart envisions its future.

Walmart Inc. in 2017 purchased for $3.3 billion Jet.com, and subsequently made a string of digital native brand acquisitions, including Bonobos. The prospects of the start-up brands such as Modcloth, Moosejaw and Eloquii in the fall were called into question by industry observers following reports that Walmart U.S. e-commerce was on track to lose $1 billion.

The Bentonville, Ark.-based giant in

June said it would be integrating Jet.com into Walmart U.S. e-commerce, while eliminating the role of Jet.com president, held by Simon Belsham, who left the company in August. With Jet.com, which was a catalyst for Walmart’s digital native acquisitions, gone, Walmart in October sold Modcloth to Go Global.

“Bringing together talent from Jet.com and Walmart into joint teams has created more opportunities for our business and our people,” said Jet.com founder Marc Lore, who joined the retail behemoth as president and chief executive officer of Walmart U.S. e-commerce when his company was acquired. “We’re now merging the rest of our Jet teams, including retail, marketing, technology, analytics and product, among others.”

Walmart continues to position itself to compete more effectively with

Amazon. Lore, who is the main architect of the retailer’s digital transformation, understands scale — and as a former Amazonian, has an insider’s insight into the company and its founder Jeff Bezos. Lore’s delivery innovations (such as BOPIS, pick-up towers and grocery orders delivered curbside or to stores or straight to refrigerators) have gotten Wall Street’s attention — and boosted Walmart’s valuation by $100 billion.

In doing the latter, the world’s largest retailer cut to the chase, beating a large field of competitors vying for market share of grocery, a business with razor-thin margins but the ability to convert clients into repeat customers at a time when consumers are loyal first and foremost to low prices.

While Lore reportedly once said that he’d like to acquire one digital native brand a month, Walmart’s future no longer appears to include small digital brands selling their wares on Walmart.com, and opening a few stores or showrooms with the retailer’s bucks. Walmart did watch and learn, and harnessed the retail and fashion savvy of former department store executive Denise Incandela to strike a deal with Lord & Taylor, and Stephanie Greenfield to launch a version of Scoop, the specialty store she founded, with potentially broad appeal.

“Dunn’s letter was certainly generous while recapping his contributions to Walmart,” said Carol Spieckerman, president of Spieckerman Retail.

“Recent leadership shifts, departures and divestitures signal that Walmart is tightening up the ship. Retail’s guiding question becomes, ‘buy, build or bridge?’ — deciding when outright acquisition, owned solutions or partnerships make more sense.

“Walmart has exemplified the ability to do all three at once,” Spieckerman added. “Even so, migration between these strategies will define Walmart’s next chapter. Walmart ramped up digital innovation through an acquisition spree. Now it’s cutting off some of those tentacles in favor of owned solutions. Narrowing its leadership base is a natural outcome of this shift and should bring greater clarity and focus.

“The next- stage integration of Jet. com eliminates siloed teams and supports Walmart’s strategy,” said Spieckerman. “Jet’s value to Walmart goes far beyond operating as a standalone e- commerce platform and arguably is more of a distraction from that perspective,” she said. “Through the acquisition, Walmart gained talent, process improvements and brand relationships that continue to positively impact its digital business.”

“At the time that Walmart made the

Jet acquisition, I said we’ll probably never know if the company underpaid or overpaid because there were so many tentacles that Jet would touch,” said Moody’s analyst Charles O’Shea. “We’ve seen that. [Walmart] has given keys to the kingdom to Marc Lore.”

Given the e-commerce losses, a battle for leadership reportedly has been raging at Walmart, symbolizing the challenges of integrating technology and physical retail, amid a clash of corporate cultures. For a while there were persistent rumors that Lore would leave Walmart, although that hasn’t happened.

Walmart U.S. chief executive officer

Greg Foran in October said he was leaving the company to lead Kiwi Air. The retailer revealed that Sam’s Club ceo John Furner would succeed Foran on Nov. 1., reporting directly to Walmart president and ceo Doug McMillon.

“John knows our business well, having held many different jobs in the company over more than 25 years, and he is helping transform it for the future,” McMillon said at the time. “He has the experience and judgment to know what we should continue doing and what we should change. He embraces technology and new ways of working, and he keeps our customers and Sam’s Club members at the center of everything we do, while delivering results for the business.”

The world’s largest retailer has been working to integrate online and off-line.