woman modeling modcloth clothing
Go Global’s plan for Modcloth is to reactivate its growth by bringing back styles customers loved, and by adding new features to improve operations and customer service. — Modcloth

Women’s clothing online retailer Modcloth is 18 years old, but this year marks a new beginning for the brand, known for retro fashions inspired by vintage thrift shop treasures.

“We call it a re-startup,” Chris Schreiber, chief operating officer of Modcloth, told CO—.

Private investment firm Go Global Retail acquired the brand in January, launching the third chapter of Modcloth’s story.

The company, known for retro and thrift-shop-inspired fashions for women in a range of sizes and its body positive images, was born in 2002 in co-founder Susan Gregg Koger’s dorm room at Carnegie Mellon University. She and co-founder Eric Koger (then her boyfriend and later her husband) began selling vintage thrift store finds from Susan’s closet, then worked with independent designers to develop its own collections.

By 2012, according to the company, it had annual sales of $100 million and was growing year over year at a rate of 40%.

It also enjoyed a loyal following of vocal and socially active customers, who loved Modcloth’s sun dresses with large floral prints, 1960s-era swimsuits and its inclusive use of plus-size models.

Brief relationship with Walmart

Some of those fans, however, were vocal about their displeasure when Modcloth became a subsidiary of the world’s largest retailer, Walmart. Jet.com, Walmart’s now defunct e-commerce arm, bought Modcloth in 2017, as part of Walmart’s strategy to acquire digitally native brands to better educate itself about next-generation e-commerce. Being part of Walmart, fans said at the time, didn’t fit Modcloth’s quirky, independent image.

Over the past year, Walmart has been shedding the brands it acquired during its e-commerce buying spree, and in October it announced a deal to sell Modcloth to Los Angeles-based Go Global Retail. Go Global took over Modcloth on January 28.

Go Global’s plan for Modcloth, Schreiber said, is to reactivate its growth by bringing back styles customers loved, and by adding new features to improve operations and customer service.

The first step in that strategy involves listening to Modcloth’s customers, he said.

“Our customer base is pretty vocal, so they tell us quite a bit,” Schreiber said.

“The brand itself has an amazing and loyal and really engaged customer group,” he said. “We’ve spent a bit of time re-engaging and really listening to understand what types of things we needed to bring forward.”

We’ve spent a bit of time re-engaging and really listening to understand what types of things we needed to bring forward.

Chris Schreiber, chief operating officer, Modcloth

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Stoking long-term brand value, not ‘churn and burn’

Schreiber is a partner in Go Global, which is headed by managing director Jeff Streader. “We’re long-time people who love brands,” Schreiber said. “We’re about long-term value for brands, not churn and burn – not come in and cut costs and sell it off. That’s not the model,” he said.

Go Global is taking the reins at Modcloth at a time when consumers are doing more of their apparel shopping online due to the pandemic, but when competition for online shoppers is more intense than ever.

Surveys by Coresight Research show that consumers are buying more clothing online, as the percentage of shoppers who are avoiding stores and public places continues to rise.

Coresight found that 31% of consumers at the end of July said they were buying more apparel online, up from only 9% in April.

‘Be rich or be smart’

But the pandemic also means that non-essential retailers, like apparel brands both large and small, will need to generate revenue, and as a result, will be fighting for their lives and for market share, Richard Harris, founder and CEO of data science and predictive intelligence company Intent, told CO—.

“[There are] two strategies in this situation – be rich or be smart,” Harris said. Smaller companies can’t compete with giants like Amazon or Walmart in terms of money spent to gain market share, “but you can compete on intelligence,” he said.

“The data that you own about your users — which they have handed over to you as part of their interactions with your brand — is going to be extremely important,” Harris said.

Go Global appears to understand the value of the brand, and “wants to get back more to the roots of the brand and the community,” he said.

 woman modeling modcloth clothing
Surveys by Coresight Research show that consumers are buying more clothing online, as the percentage of shoppers who are avoiding stores and public places continues to rise. — Modcloth

New buy now, pay later purchase option

In response to customer demand, Go Global has added Klarna’s buy-now-pay-later service to Modcloth’s platform, which allows online shoppers to split payments into four equal installments with no interest.

Modcloth customers, Schreiber said, had been asking for a pay-later option. Klarna was selected from the growing field of pay-later providers in part because of its ability to provide industry insights as well as handle payments. Klarna works with 4,200 merchants in the United States and 200,000 globally, and handled $35 billion in transactions in 2019.

Go Global is also pursuing partnerships with tech providers that help Modcloth better customize its communications with customers, and that help personalize their online experience.

Go Global, Schreiber said, has been encouraged by how Modcloth has performed since it acquired the brand. While Go Global didn’t reveal sales figures, Schreiber said that sales and margins “have shown a very positive trajectory” in recent months, and that performance for the Modcloth “re-startup” is ahead of schedule.

While Modcloth had previously begun opening physical locations, those closed when Walmart sold the brand, and Go Global plans to keep the brand strictly online for the time being.

Instead, Go Global is looking to reconnect with customers by bringing back popular patterns, dress silhouettes and products from the past.

In recent weeks Modcloth has seen an encouraging uptick in orders for special occasion, wedding and wedding guest dresses.

At first the Modcloth team was surprised by that surge during a time when much of the country was still sheltering at home. It reaffirmed Go Global’s philosophy, Schreiber said, of listening to the customer, rather than assuming you know what she wants.

“It’s definitely a paradoxical time where you really do have to listen and pay attention, because your assumptions may not be right,” he said.

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Published August 10, 2020