Many traditional retailers have been fighting to survive.
But now they face another challenge: Amazon.
Amazon’s fashion sector is a huge threat to these retailers, Thomas Lee of The San Francisco Chronicle writes.
Lee points to a Bloomberg story from this past summer in which Cowen and Co. estimated that Amazon would surpass Macy’s by 2017.
That doesn’t seem too far off; Amazon is well on its way to dominating the apparel industry.
Amazon has launched seven private-label brands, cementing its commitment to the sector. The company recently launched a live style show, and even set up a warehouse in Williamsburg, Brooklyn in 2012 specifically for its fashion sector.
And as soon as customers get used to the way Amazon’s clothes fit, the online retailer could become even more competitive.
“Once they establish their brand portfolio and get consumers used to the fit and patterns, they have every opportunity to be successful,” Chicago-based consultant Brian Kelly said to The Chronicle.
Gap Inc. CEO Art Peck said on a fourth quarter earnings call that he was “extremely pleased with the quality restoration” for both Gap and Banana Republic’s apparel for the forthcoming seasons, but improving styles alone may not be enough to set off a renaissance given Amazon’s rise to prominence. Additionally, Lee points to how Gap’s online sales only grew by 1% in 2015.
So the not particularly competitive landscape makes it an easy time for Amazon to outshine everyone else in the apparel industry.
“Apparel is a large category that remains highly fragmented. We think the low barriers to entry, size, and significant competitive set make this an attractive category for Amazon,” KeyBanc Capital analyst Ed Yruma wrote in a note, according to Women’s Wear Daily.
Not every retailer needs to be scared of Amazon, though.
Former senior vice president of strategy at Neiman Marcus Steve Dennis told The Chronicle that he doesn’t believe that Amazon will usurp luxury stores. After all, Amazon has decided to refrain from securing partnerships with luxury brands, Jennie Perry, chief marketing officer of Amazon’s fashion division, told Business of Fashion last year.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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