Cultures clash in the aftermath of Walmart's e-commerce acquisitions

Dive Brief:

Employees of Jet and other e-commerce players now owned by Walmart are grappling with office policy changes like prohibitions on drinking alcohol in offices and even cursing, The Wall Street Journal reports.
While at first Walmart banned traditional Jet perks, like office happy hours and access to alcohol in office cupboards, the retail giant has relented somewhat, allowing scheduled after-work celebration in the office. Similar practices at outdoor e-commerce site Moosejaw, acquired by Walmart in February, have been allowed to carry on, according to the report.
The story underscores the culture clash between the 55-year-old, Arkansas-based brick-and-mortar stalwart and its young, e-commerce startup acquisitions, which favor Silicon Valley workplace environments designed to balance long hours of creative work with unconventional office amenities.

Dive Insight:

Along with its $3.3 billion purchase of Jet last year, Walmart brought in Jet founder Marc Lore as its U.S. e-commerce chief and commenced a steady stream of pure-play e-commerce acquisitions, including women’s apparel site ModCloth and menswear site Bonobos. The move has already paid dividends: Walmart’s first quarter e-commerce sales ballooned 63% with an attendant 69% rise in digital gross merchandise volume, as same-store sales increased 1.4% and traffic to stores rose 1.5%. Its merchandise assortment, meanwhile, rose from 10 million to 50 million in about a year, Walmart said.

The new brands also help the retailer improve the experience for existing customers and extend its reach to new customers, Ravi Jariwala, senior director of public relations at Walmart.com, told Retail Dive. Those new customers are in demographic groups that don't generally frequent Walmart stores; the average Walmart customer is less wealthy and quite a bit older than those typically shopping at Target and Amazon. The company has had difficulty in the past moving beyond that core base.

Walmart and those startups' CEOs have taken pains to assure customers that little will change, but the association with Walmart has disenchanted some of their fans. The culture clash appears to extend to the companies’ operations, too, and may cause trouble in the long run if employees used to the Silicon Valley approach become disillusioned with the new limits. Experts have told Retail Dive that Walmart’s corporate culture has interfered with previous efforts to boost its fashion cred and reach a more diverse consumer base.

“You’re talking about the changing of the tide, and not just from the product development point of view. Walmart has thousands of stores and thousands of people. Walmart has an embedded culture, and the attempts they’ve made to change have failed largely because they’ve failed to change that culture,” Mark Cohen, director of retail studies at Columbia University's Graduate School of Business, told Retail Dive about the Jet merger last year.

"And even when Walmart does change, that pressure to show immediate results works against it," he said. "As soon as their efforts wouldn’t show fruit, they’ve abandoned it. It takes two to five years to change the composition of a large store and a large number of stores without losing your core customers and your underlying business... I’ve seen these kinds of initiatives come and go at Walmart, and I have never seen them stick. I think there are too many people there who are of the view ‘This too will pass.’”