Amazon Primed to Become Top US Apparel Retailer by 2017 (AMZN)

Seattle-based firm, the least likely leader in fashion retail industry, projected to become the biggest clothing retailer in fiscal 2017.

Amazon AMZN shopping

In the fashion scene, the top fashion retailer is typically a well-known department store chain. That would be the industry’s most plausible scenario. While that is usually the case, in 2017, there could be a new top player in town.

A former book seller, the e-commerce pioneer, Inc. (NASDAQ:AMZN) undeniably mastered the art of selling essential goods online. In fact, Amazon has been bolstering its fashion business and partnership for a couple of years now, promoting itself in magazines to gain fashion credibility. In a study by Cowen & Co. [via Geekwire], Amazon is primed to become the biggest clothing retailer in the United States next year, beating Macy’s Inc (NYSE:M) for the first spot.

Cowen’s report states that Amazon’s clothing and accessory sales will increase about 30% next year to $28 billion, while Macy’s sales are forecast to decline 4% to $22 billion. Cowen also estimates that Amazon’s clothing sales will jump by 182% in the next five years from 2016’s $22 billion to $62 billion in 2021. In other words, the e-commerce giant’s market share will surge from 6.6% to 16.2% by fiscal 2021. Cowen also inferred other brands including TJ Maxx, which is expected to become the second clothing retailer with projected sales of $26 billion, while Macy’s is expected to come in third, with estimated sales of $23 billion.

The report also says that some of the common reasons shoppers used Amazon to buy clothes are to replace old items, buy well-known brands, and purchase clothing they’ve seen elsewhere. Amazon’s Prime $99/year service with its guaranteed fast shipping, convenience, and customer service was also cited as another main factor for buying clothes through the online retailer. On the flip side, major shortcomings, according to Cowen’s focus groups with shoppers study, were that they can’t try on the clothes, clothes were difficult to browse, or that clothes were not well customized to suit each customer.

In the report, Cowen also compared Amazon’s apparel business to Wal-Mart Stores, Inc.(NYSE:WMT) and Target Corporation (NYSE:TGT). In the previous 10 quarters, Amazon had an average of 28% annual growth in customers buying clothes, while Target and Walmart had an average of 2% yearly drop in the share of customers buying clothes.

Amazon’s growing popularity can be attributed to its aggressive campaign for clothing sales. In February the company added about 2,000 fashion products under 7 fashion labels. The company purportedly spent around $15 million on the advertisements alone, which highlighted the fall season slate. Aside from pushing clothing sales, Amazon stepped up its fashion endeavors by expanding its selection of owned and borrowed brands, hosting the Met Ball and other Fashion Week events. Amazon also aired a season of Vogue’s Reality series “The Fashion Fund.” In addition to that, the company rolled out a shoppable live streaming called “Style Code Lives” in March this year. This is the first time that Amazon Video aired a live show with options to buy directly from its streaming page.

The projection is indeed good news for Amazon. The company has attempted to enter the fashion scene for over 12 years now, but department store chains continue to soar, until now, that is. The promising report shows that next year might be the break that Amazon had so long desired.

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