Retail

Amazon is no longer just the go-to source for books and electronics; according to analysts at Cowen, the online retail giant poised to become an important apparel destination. Amazon only began selling clothing in 2002 and, if the projections from Cowen are correct, it will soon be the #1 clothing retailer in the US. In order to reach number one, Amazon will have to pass Macy’s. The department store is currently the largest retailer of fashion in the country, with a GMV (gross merchandise volume) of $24 Billion this year. By contrast, Amazon’s current GMV is only $16 Billion. But the online company has averaged 29% growth in purchasers over the past over the past 6 quarters in the face of declines at its largest competitors. This level of growth leads Cowen to project that Amazon will surpass Macy’s by 2017. It is easy to understand why consumers are choosing Amazon more often. Convenience is a large factor, but so is selection; Macy’s offers 85,000 apparel items on their website compared to Amazon’s 343,000. For its part, the department store is trying to drive sales through innovation. Between iBeacons, same day delivery, mobile payments, and being able to search for clothes from a user-provided photo, the company is working hard to retain and grow its customer base.

We at Circuits and Cable Knit are curious to watch this and see if the projections play out. We often have discussions about whether the department store model is still viable. Being able to physically interact with a large, multi-brand inventory of clothing is important to a lot of people. Additionally, the tactile nature of browsing and being able to easily try things on  cannot be replicated. Unfortunately people are driven away by the experience; messy merchandise, apathetic staff, and dressing rooms as well cared for a gas station bathroom do not make a customer feel valued.