In another sign that Walmart is serious about its commitment to both innovation and becoming a fashion leader, the world’s largest retailer has wooed Rent The Runway co-founder Jennifer Fleiss to lead its “Code Eight” startup. She will focus on developing “highly personalized, one-to-one shopping experiences,” according to a statement. Her hiring follows the March 2017 launch of the Walmart tech incubator Store No. 8, named for an early Walmart location where founder Sam Walton would test out new ideas.
The Retail TouchPoints team discusses whether someone from the scrappy, fast-moving startup world will change the culture at Walmart or whether it will change her, and what Fleiss’ move means in terms of changing roles in retail overall.
Debbie Hauss, Editor-in-Chief: What remains to be seen with Walmart’s recent flurry of unique and innovative smaller retail businesses is how Walmart is going to manage these businesses. If Walmart executive management is wise, they will largely leave the smaller, agile businesses alone to maintain their established brand images. The fear is that Walmart will try to gobble up these businesses and make them part of the Walmart persona. That would be deadly to Moosejaw and Bonobos if that acquisition goes through. But by jump starting an Innovation Incubator, maybe the organization is seeing the light when it comes to the reasons why smaller, unique brands could be an asset to a larger, more traditional organization. But once again, the incubator will only succeed if Walmart allows it to. So, to be successful Fleiss may have to stay strong and stand her ground when it comes to challenging the traditional thinking within the Walmart organization.
Adam Blair, Executive Editor: A little over a year ago I interviewed venture capital expert Zach Ware, who discussed the dangers retailers face in trying to “buy” innovation: “Simply buying a company and bolting the brand to your own doesn’t work anymore. There’s innovation at play at the startup company that you want to allow to thrive, and if you suck them into your existing machines, you’ll kill it.” Ware also noted that company founders stick around only 12 to 18 months after an acquisition, on average. Walmart’s recent moves to woo innovators — not just grudgingly accept them as part of the purchase price — strikes me as a good attempt to get away from the sad tradition of stifling innovation. It’s also a recognition that technology alone doesn’t equal innovation: it’s technology PLUS people PLUS ideas PLUS resources. The question is, will Walmart be patient enough to wait for results if, as happens in many startups, the first few “launches” fail to achieve escape velocity.
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Alicia Esposito, Content Strategist: I remember seeing the announcement that Jennifer Fleiss was stepping down as Co-CEO at Rent The Runway in an email from the company. She emphasized that while she loves the brand, and is proud of the work she has done, that her passion is “building things.” At this point, she noted that Rent The Runway no longer needs to be built, but rather needs to scale, and that she needed to find the next thing to build for the general public. Needless to say, I was a bit surprised that she ventured over to Walmart, but given Code Eight’s focus on “one-to-one, highly personalized shopping experiences,” the move makes sense. She helped build a brand that differentiates strongly in this area. I think we will continue to see Walmart, and other large retail brands, tap tech entrepreneurs and startup gurus to evolve their business models and practices. At the same time, we’ll also see executive roles and requirements continue to change, as the rules and requirements for retail success are no longer what they once were.
Glenn Taylor, Senior Editor: In poaching Jennifer Fleiss to oversee its incubator, Walmart is bringing in a mind that’s already launched a company from the ground up. In reality, it would make sense for any of the struggling traditional brands to take this direction, particularly given how many C-level execs have had difficulty transitioning their core business models to match shifting consumer behaviors in recent years. There are plenty of talented people that have different opinions and perspectives on how to handle in-store experiences. Fleiss should be able to thrive in this situation based on the fact that she’ll likely have resources she didn’t necessarily have while she was building Rent The Runway, but it will be interesting to see how she will apply her apparel/fashion knowledge to a mass merchandising model. As long as Walmart is supportive in the move and allows the innovators to foster ideas, then I see the Store No. 8 experiment working in the company’s favor. Simply put, Walmart can’t be afraid to spend money here, especially given how Amazon has made its entire business about putting money into longer term projects. Unfortunately, I do feel that many smaller e-Commerce brands will feel pressured to potentially sell to a larger brand if they feel their business is stagnating. But I think the industry itself has so many forward-thinking minds at these younger companies that we’re bound to see innovation across the board either way.
Klaudia Tirico, Features Editor: With all of these new acquisitions — and now the appointment of Fleiss — I’m starting to think Walmart is in over its head. Just how many things can the retailer juggle so quickly? But who am I to say whether they could handle it all or not? But I have to admit that Walmart is doing some unique things, and hiring a former Rent The Runway exec is pretty smart. Since Fleiss is known for building an innovative company from the ground up, I can foresee her doing cool things with Walmart. More retailers should be thinking out of the box, as Walmart has — especially in an industry dominated by disruptors. In fact, preliminary findings from the newest Retail TouchPoints survey, dubbed Impact Of New Retail Roles, show that 66% of retailers surveyed had added significant new executive roles in the last three years. No longer are companies creating textbook roles; they’re adding unique positions just as Walmart has done with Fleiss, to help enhance the customer experience. I think retail is moving in this direction at a good time — if an industry is changing so rapidly, it’s up to retailers to keep pace and embrace the changes.
