Amazon Is Planning Its Own Luxury Apparel Platform
On the latest episode of Today In Five:
According to Women’s Wear Daily, Amazon is working on its own luxury apparel platform. The move would be a far cry from the current trajectory for the retailer, who has mostly sold generic brands through third-party sellers.
Apparel conglomerate, PVH, announced plans to sell its Speedo North America swimwear business to Pentland Group for $170 million. In a statement, the CEO of PVH said the move was strategic as the company works to optimize and streamline its portfolio and focus on its Calvin Klein and Tommy Hilfiger brands. The companies have entered into a definitive agreement, and the deal is expected to close in the first quarter of PVH’s fiscal 2020 year according to a press release.
According to the senior vice president of Peloton retail, Jennifer Parker, the company’s store base could double over time. Peloton’s store base, which resembles showrooms where Peloton bikes and treadmills are displayed, currently stands at more than 80. That includes recent store openings in San Diego and Germany. Parker noted that the company is focused on opening locations in top tier malls. She also pointed to several factors behind the physical store push while some in retail continue to cut back. The showrooms would allow Peloton to collect data on customers and potential ones, which would help the company identify key trends and plan new products and services accordingly.
In 2019, Kohl’s went all-in on Amazon when it announced it would expand the partnership to accept returns from the e-commerce giant at all of its stores. Despite recent questions about whether the partnership is working, Kohl’s CEO defended the strategy. At the National Retail Federation’s Big Show, she said, “Amazon is working, this returns program is working...We’re seeing the traffic, we’re getting the customer, we’re getting a younger customer. To what we expected, some of them are buying, you’re not getting 100%, but some of them are buying." According to data from Earnest Research, Kohl’s stores participating in the Amazon returns program in Chicago saw revenue growth top 10% in 2018, compared to 5% at non-participating stores. But it’s still unclear whether the partnership will be enough to stem sales losses in its fourth quarter and full-year.
Amazon Plans Its Own Luxury Apparel Platform
Amazon is planning a luxury apparel platform that will first be introduced in the U.S., then expanded internationally. According to a report from Women’s Wear Daily, the retail giant is already working with 12 unnamed brands. Amazon is said to be building a warehouse in Arizona dedicated to the project and planning a $100 million campaign to market it. If true, a move into luxury fashion would be a far cry from Amazon’s apparel trajectory so far. Despite significant moves to develop its own private-label clothing, the e-commerce giant, for the most part, sells generic brands, largely in basics and activewear, through its third-party sellers.
The number of nonbranded or generic apparel items sold by Amazon in September 2019 grew 906% year over year, and topped their ranking, according to research from Coresight. Amazon’s history with bigger names is decidedly mixed. Some, including Birkenstock and Nike, have joined, then left. Birkenstock cited counterfeit concerns, and Nike characterized the move as simply dropping a distribution partnership, though some analysts speculated the move came from the brand’s desire to have more control over its brand than Amazon now offers.
Amazon has apparently taken that note. Its luxury platform would give brands, “full control,” over their pages, including how much they sell and at what price, while providing access to Amazon’s fulfillment and customer service capabilities. This effort could boost Amazon’s take in the market, according to some analysts.