Amazon is bringing clothing retailers & brands to heel

Sales pressure has driven traditional brick & mortar retailers onto Amazon

GAP

GAP has been closing stores and facing headwinds from COVID. The brick & mortar sales have been declining for several quarters, and in the 4th quarter of 2022, GAP embraced Amazon fully. GAP has placed a large portion of its selection on Amazon; it regularly runs deals on its gift cards and mainline clothes on Amazon.

I am a big fan of this move for GAP; I don’t think they had a way out of their physical retail locations that would allow them to resume growth. On top of that, it’s a harder sell to get families to shop online for GAP when they can get similar products from broadline retailers like Amazon. GAP rides this line of differentiated clothing for the family and low-cost clothing for everyone – it’s a tough space to compete in.

It will still be a tough road for GAP, but they haven’t been on Amazon for even a year and are executing well. The market at least initially agreed that this might be a good move for GAP, and when it was announced, their stock rallied.

Victoria Secret

Victoria’s Secret cited troubled sales specifically as the reason they joined Amazon, and since launching fragrances, they have expanded to over 4,000 mainline products. Amazon has a way of taking over a retailer’s attention, but brands like Bose (who does have brick & mortar) have pivoted onto Amazon while growing their own DTC website.

In 2023 they made news by putting a large section of their catalog on sale for Prime Day; it was covered as a top deal on fashion websites for Prime Day.

So who is the winner here? Time will tell, but the cards are stacked against Victoria’s Secret. Unlike GAP, Victoria’s Secret products are a bit more boutique; in the longer run, I think being on Amazon will erode their brand value and margins. Amazon will begin to understand its space well and launch competitive products at a lower price. At the same time, more of Victoria’s Secret’s revenue will likely come from Amazon, which will come with its challenges.

English Factory – high fashion on Amazon

English Factory is the best example Amazon can hold up of luxury or high fashion moving onto the platform. English Factory is an LA based fashion boutique and they are consistently touted by fashion outlets as a top brand to get on Amazon. For these luxury brands I see and foresee Amazon having trouble getting the full selection onboarded.

English Factory (and brands like it) will likely want to work with Amazon across a lot of its selection but given the complexity of both industries (fashion and Amazon) its unlikely in the near future Amazon will become a luxury fashion retailer.

Amazon Fashion moves into the fore

In 20223 Cosmo wrote an article “Take Notes: These Are the 25 Best Clothing Brands on Amazon” – this would have be impossible even 5 years ago. Amazon is both getting credibility from onboarding brands on fashion and accelerating its adoption as a fashion retailer – even if not “high” fashion. Amazon is not going to push experienced clothier’s out like Nordstrom because they simply cannot replicate the selection or quality.

Amazon will continue to expand its softlines and may acquire more clothing brands

If the shoe doesn’t fit, force it. Amazon may try to buy its way into higher end luxury brands but even if it doesn’t they have made big strides in getting family clothing purchases to happen on their platform. Over the next few years a lot of eyes will be on GAP, Victoria Secret, and English Factory to see how each of their strategies is paying off.