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Amazon became the largest clothing retailer in the United States as the coronavirus pandemic dramatically accelerated the shift from traditional retail to e-commerce, according to new data from Wells Fargo.
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A group of retail analysts at the bank estimates that sales of the e-commerce giant’s clothing and shoes in the United States, including third-party sellers, grew 15% in 2020, to $ 41 billion. The increase represents 11-12% of all clothing sold in the USA and 34-35% of all clothing sold online.
“Although this was only a modest increase of + 15%, we believe that the overall demand for clothing has been stifled by the pandemic,” wrote analysts in the report. “Amazon customers were more focused on ‘essential’ items and / or items that catered to the new home work environment. “
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| AMZN | AMAZON.COM, INC. | 3,135.73 | +43.87 | + 1.42% |
| WMT | WALMART, INC. | 132.37 | -0.95 | -0.71% |
Still, the total is 20-25% higher than Walmart, which ranks as the second largest player in the United States clothing market, selling about $ 33-34 billion in softlines annually. Walmart recently announced that it has hired American designer Brandon Maxwell as creative director for two of its own brands, Scoop and Free Assembly.
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The Wells Fargo report notes that only six other American market participants sell $ 10 billion or more in softlines annually, including TJ Maxx, parent company, TJX Companies, Macy’s, Target, Kohl’s, Gap and Ross Stores.
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| TJX | TJX | 67.26 | +0.50 | + 0.75% |
| M | MACY’S, INC. | 19.70 | -0.43 | -2.14% |
| TGT | TARGET CORP. | 178.40 | -1.81 | -1.00% |
| KSS | KOHL’S CORP. | 61.12 | 0.00 | 0.00% |
| GPS | GAP = GO | 31.67 | +0.51 | + 1.64% |
| ROST | ROSS STORES, INC. | 123.68 | +0.29 | + 0.23% |
Looking ahead, Wells Fargo analysts predict that Amazon will grow its softline business at a “rather modest rate of + 10%”, selling more than $ 45 billion in clothing and footwear in 2021. It is estimated that the gross value of Amazon merchandise for clothing and shoes in the U.S. grows to more than $ 4 billion in 2021.
However, Wells Fargo expects online sales to remain stable in 2021, as consumers return to in-store purchases, as the distribution of the COVID-19 vaccine increases. As a result, the share of softlines sold online is expected to decrease to around 34%, but still above the pre-COVD level of 25%.
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While traditional retailers have historically viewed Amazon as a competitive threat, Wells Fargo analysts argue that there has been a huge increase in partnerships on the platform.
“Many suppliers are partnering with Amazon to establish a comprehensive presentation of the brand on the website, with varieties that compete minimally with existing channels,” wrote the analysts. “Perhaps most importantly, the partnership with Amazon allows brands to better police third-party distribution on the site and maintain control over their image / brand equity.”
Examples include Haines Brands, PVH Corp., VF Corp., Skechers, Steve Madden and Carter’s Inc., which created a brand, Simple Joys, specifically for Amazon.
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| HBI | HANESBRANDS | 20.22 | -0.22 | -1.08% |
| PVH | PVH CORP. | 105.00 | -1.00 | -0.94% |
| VFC | VF | 78.31 | +2.48 | + 3.27% |
| RL | RALPH LAUREN CORP | 120.73 | -0.95 | -0.78% |
| CRI | CARTERS INC | 89.85 | -0.22 | -0.24% |
| SKX | SKECHERS USA | 41.20 | +1.18 | + 2.95% |
| SHOO | STEVEN MADDEN | 37.78 | -0.24 | -0.63% |
Amazon launched its “Luxury Stores” section in September, attracting Oscar de la Renta as the first luxury brand on the platform. In addition, the company has more than 100 private label clothing brands on its website.
The company also launched Prime Wardrobe in 2017, which offers a “try before you buy” model for Prime members, including brands like Calvin Klein, Levi’s and Adidas. In July 2019, the company launched a Personal Shopper service for $ 4.99 / month, in addition to the Amazon Prime subscription, with a focus on convenience and providing buyers with a stylist who provides personalized recommendations.
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Overall, the gross value of Amazon merchandise in the U.S. in 2020, excluding the Whole Foods Market, was $ 290 billion, an increase of 22% year on year.
“Given that Amazon’s addressable market (as we define it) grew by $ 180 billion, this means that Amazon was responsible for around 50% of the market’s sales growth in 2020,” added analysts. “This marks the 21st consecutive quarter in which AMZN’s share of growth has exceeded 20%, demonstrating how AMZN is becoming dominant in the retail landscape.”
An Amazon spokesman did not immediately return FOX Business’s request for comment on Wells Fargo’s report.