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Amazon set to become top US apparel retailer by 2017
May '16
Courtesy: Amazon
Courtesy: Amazon
Global e-commerce major Amazon.com is on course to become the top American apparel retailer next year, according to investment bank Cowen.

John Blackledge, the bank's analyst, said recent earnings reports by Amazon and Macy's painted a clear picture.

“In light of Amazon and Macy's recent results, we feel more confident that Amazon will displace Macy's as the No. 1 US apparel retailer by 2017,” Blackledge said in a research report. “Amazon's Apparel & Accessories business is one of the key drivers of Amazon's EGM (electronics and general merchandise) segment.”

Blackledge had also predicted in a report last July about Amazon overtaking Macy's in apparel sales.

Amazon's success in the apparel category is being driven by a dramatically larger selection, ramping brand relationships, superior fulfillment and technology innovations.

Amazon is growing in the clothing business, while traditional retailers such as Wal-Mart and Target are in decline, Blackledge said.

In the first quarter of 2016, the number of Amazon apparel purchasers increased 19 per cent year over year, while apparel buyers at Wal-Mart and Target fell 1 per cent and 5 per cent, respectively, he said.

“The longer-term trend also reflects a share shift in apparel purchasers, with Amazon apparel purchaser growth of 28 per cent each quarter (on average) since 2014, while apparel purchasers fell 4 per cent and 3 per cent at Wal-Mart and Target,” he said. “In Q1, Amazon had 15 per cent more apparel purchasers than Wal-Mart (vs. 24 per cent fewer in Q1 2014) and 37 per cent more apparel purchasers than Target (vs. 4 per cent more in Q1 2014).”

This week, Macy's reported soft Q1 sales and slashed its full-year forecast that sent its stock to a four-year low on Wednesday.

Macy's said its Q1 sales fell 7.4 per cent year over year to $5.77 billion. Analysts on average were looking for $5.93 billion in sales.

For 2016, Macy's now expects same-store sales to fall 3 per cent to 4 per cent, compared with its prior guidance for a 1 per cent decline.

On April 28, Amazon reported its highest sales growth in nearly four years. Its Q1 revenue jumped 28 per cent to $29.1 billion, overtaking a forecast of $28 billion.

Blackledge noted that for the past three years, Cowen's monthly survey of 2,500 US consumers has consistently shown that Amazon is adding shoppers, while the number of Macy's shoppers hasn't changed. Amazon also doesn't have the problem of physical stores, which present Macy's and other retailers with a host of complex issues, like real estate value, maintenance, upkeep, marketing and human interactions. (SH)

Fibre2Fashion News Desk – India

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