Walmart is learning a tough lesson in the challenges of expanding its business into a premium category after a dispute with upmarket outdoor-wear brand Black Diamond.
The dispute is rooted in the US retail giant’s acquisition of outdoor gear retailer Moosejaw for $51 million. Walmart thought the acquisition would help it reach a new customer demographic it does not traditionally engage with, while Moosejaw saw the investment as an opportunity to scale its business up from its 10 physical stores and single online platform.
Black Diamond, which makes premium-quality outdoor wear, had sold its products through Moosejaw’s stores and online prior to the company’s sale. But Black Diamond was incensed this week to find its products being promoted on a new subsite of Walmart’s online shop, Premium Outdoor Store curated by Moosejaw. It sent Walmart a letter demanding it cease and desist promoting its products on any Walmart-branded site, the clear inference being an association with Walmart undermined the Black Diamond’s premium status.
The legal letter demanded Walmart stop using its name and trademarks “in a manner likely to confuse consumers into believing that Walmart is an authorised dealer of Black Diamond or that the new outdoor Walmart.com site is otherwise associated with or sponsored by Black Diamond”.
The company accused Walmart of “infringing use of several hundred copyrighted photographs, the rights to which belong exclusively to Black Diamond”.
“We did not see or approve the statement which Walmart released Monday and have never sold to Walmart,” Black Diamond president John Walbrecht said in a statement emailed to Retail Dive. “Black Diamond remains committed to our specialty retail partners and we do not plan on deviating from this strategy.”
A Walmart spokesperson emailed Retail Dive saying it would never activate a brand [online] without its permission.
“The decision to be part of this new experience will continue to be up to each brand, and our hope is that brands, and even other retailers, share our commitment to driving a truly inclusive outdoor industry,” the spokesperson said.
“As we grow the Premium Outdoor Store, we will continue to look for leading brands and retailers that want to reach a new, wider audience.”
Black Diamond’s products appear to have since disappeared from the Walmart online store.
Quoting retail industry observers, Daphne Howland of Retail Dive wrote that a close association with Walmart “is a mixed bag for upscale brands because they enjoy loyalty from younger, wealthier shoppers who don’t necessarily look favourably on an association with Walmart’s corporate reputation, and might expect prices to come down”.
Black Diamond says its action against Walmart is driven by a commitment to specialty retailers which stock its products.
