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How should specialty retail respond to Amazon’s apparel push?
Through a special arrangement, what follows is a summary of an article from WayfinD, a quarterly e-magazine filled with insights, trends and predictions from the retail and foodservice experts at WD Partners.
Sometime this year, Amazon.com is predicted to become the biggest apparel retailer in the U.S. But, when it comes to fashion, it’s just not a very good one. Neither is Walmart, by the way, which the e-commerce giant will eclipse to claim the top spot.
That’s the tough lesson for the apparel industry: Amazon doesn’t have to be better at fashion to upend the apparel world, it only needs to be just okay.
Beyond offering a mass approach of middle-of-the-road private label offerings alongside established apparel brands, Amazon can see market demand in ways no specialty retailer can. In each of their respective categories, Amazon has exclusive knowledge about what shoppers want.
If specialty retailers try to beat Amazon at its own game, they will lose. Amazon is an unbeatable data machine. But the data, no matter how voluminous, is never going to beat a groundbreaking creative concept.
It’s time for specialty retailers to adopt convention-busting as a way of life. There’s no excuse for going to market with a boring store experience. Yet, outside a few concepts (i.e., Vans, Urban Outfitters, independent Third Wave retailers) complacency rules. Who is the Abercrombie & Fitch of the 21st Century? Shocking shoppers with half-nude models and noxious fragrance, blasting club music into mall atriums? It might not have been an experience for all, or one that would work today, but it was an edgy concept that worked amazingly well at the time.
Moreover, what breakthrough trend or fashion revolution have specialty brands ignited in recent years? Data can only suggest your customers don’t want skinny jeans anymore. It won’t create the next fashion breakthrough.
Given what we know, there is only one defense left against Amazon: create and introduce breakthrough ideas, fashions and store experiences. Upend the staid and derivative styles dominating the market. Render the uber-data obsolete and become a fashion vanguard again.
Discussion Questions
DISCUSSION QUESTIONS: What is unique about the competitive challenges Amazon places on its rivals in the apparel category? Is a lack of creativity to blame for Amazon’s advancement, and what can retailers do reignite that spark?
Poll
BrainTrust
David Katz
EVP & CMO, Randa Accessories
Brandon Rael
Strategy & Operations Transformation Leader
Lee Peterson did a nice job of explaining one of Amazon’s true super-powers — data. And even as successful as they have been, I’d say Amazon is still in the early days of figuring fashion out. I expect Amazon to get a lot better at fashion in the future. I do agree with Mr. Peterson that the real innovative fashion breakthroughs of the past were not merely results of data science but more a function of a passion and creativity about the store and offerings that created excitement and drove success. Lee’s right that retailers need to get back to this, but it’s harder than it looks and picking winning concepts in the fickle fashion world seems to be on par with picking lottery numbers.
Well said by both Mr. Peterson and Mr. Ryski. I’ll add that pushing for fashion means pushing for more risk. As Mark points out, picking winners is harder than it looks. I can only say EMBRACE this and manage the risks accordingly. I refer to it as an issue of dosage. Too little doesn’t work. Too much creates painful side effects. The art of merchandising and storytelling is knowing when to say “enough.” It’s about HOW to edit and flow and manage freshness in the assortments. Many retailers find this a very difficult assignment, with or without Amazon breathing down their necks.
Amazon did not create today’s “over-supply” of apparel and resultant price compression. They did not invent the internet or e-commerce. Amazon was not the first to sell books online, nor did they introduce the world to digital book downloads. The shift in the legacy retail apparel model is not Amazon’s fault. The previous model was not the “fittest to survive” in the new world order.
Amazon is part of apparel’s evolution. The company is satisfying and delighting customers, the goal of all successful retailers. Amazon owns hundreds of physical retail stores and it has created retail selling tools, destination shops and lockers, a powerful third-party apparel marketplace and a loud call-to-action. You can be part of this evolution, too.
Amazon is a platform. You can use it. You can differentiate your product, brand and service. What you cannot do is stand still.
As a “for profit” corporation, Amazon’s goal is to increase their market share and to make money. They have not created this robust retail value chain to purely benefit third parties. They are a fierce competitor.
Whether you are a legacy apparel retailer, a global brand, an emerging supplier, an entrepreneurial start-up or you work in retail you must adapt to the changing landscape of commerce. Keep one eye focused on your customer and the other on Amazon: neither will stay still, nor can you.
Retailers with stores have the advantage of allowing customers to come in, see, touch and try the clothes on. However, too many retailers have lost their edge and are no longer focusing on what makes them unique. Instead they are chasing after the competition. There is too much “me too” today in retail, especially in fashion apparel. The opportunity remains for those who attempt to be different. Amazon only needs to sell items, but the brick-and-mortar fashion apparel retailers can compete with designs that are unique and only available at their stores or on their website. The way you win is to be different and to be the best. It’s no different with fashion apparel.
I am not sure that “come in, see, touch and try the clothes on” is really an advantage any more. From observing my wife buy apparel; she shops online, orders multiple items, they arrive, she touches and feels them, tries them on (and even sometimes asks me my opinion). She keeps what delights her and sends the rest back. It’s easier, more convenient and takes considerably less time than going to the store.
In our family she is not unique. My daughter and daughter-in-law shop that way for their entire families.
I’m sure Gene, however, I too speak with many people of all ages including my daughter who is 26, and they all prefer trying on clothes in the store before buying. And although they all shop online, they choose to buy very little apparel that way. I think you’ll find arguments on both sides because it comes down to personal preference. The point I was making is that brick-and-mortar retailers have an opportunity to offer unique fashion that when done right will create the desire for the customer to come in and see it for themselves.
I agree with your point.
The Rebecca Minkoff store in NYC is a perfect example of your suggestion. That is how far brick-and-mortar has to go.
Agree with your points here, Art. Most traditional fashion retailers have not taken the necessary steps to innovate and redefine the customer experience. Surprisingly, a store like Macy’s has started to push in the right direction, investing in retail startup b8ta to enhance “The Market” concept they are testing. More partnerships and enhancements to bring the experience to the 21st Century will allow retailers to compete in a data-driven opportunity that Amazon hasn’t fully mastered yet.
When consumers seek to refresh their look and take themselves even in a slightly new direction with apparel, neither Amazon nor Walmart are the obvious first stops over physical shops. Retail helps the customer to define themselves anew and enjoy the transition in that new direction of styles, fabrics and color.
Amazon knows what the fast fashion consumer wants, this is true. Amazon doesn’t have data on consumers that aren’t shopping fast fashion. For example, if you were looking for Crossfit gear in L.A., Superfit Hero isn’t on Amazon and probably never will be. She’s a locally sourced Crossfit apparel maker inspired by her customers. She’s one example of many.
Fast fashion is a commodity game. The more you make, the cheaper it is. Consumers know this too, and will buy it for the cheapest they can find it. We shouldn’t be worried about who owns this title, except to stop the waste factor that comes with such commodity items.
For the rest of the apparel world, get online and digital and tell the masses about your product. Consumers are looking for unique stories and wonderful products. If you’re a retailer, *gulp* dare I say it? Take a page out of Macy’s book and find local fashion to partner with. You’ll be better for it.
Customer expectations are certainly no longer defined by the specific category a retailer plays in — the overall experience is impacted by every experience a customer has and those experiences have been elevated. Apparel retailers need to create immersive experiences that blur the physical and digital spaces and play where Amazon is not that interested — exclusivity. Even a mass brand can create exclusive lines and experiences (look what Macy’s is doing with The Market, Story, b8ta) and provide customers things that can’t be found on Amazon. Data is king, yes, but the creative use of that data that puts a little art into the science is where apparel retailers can win.
Is the answer an innovative fashion breakthrough? Or is it satisfying the customer who makes the trip to the store and wants to try, buy and get on with their life? That’s what Amazon does with their Prime Wardrobe. Their customers order, wait, try, buy and return what they don’t want for free. And get on with their life. No bells, no whistles.
Having the clothing selection the customer wants notwithstanding, brick-and-mortar retailers need to focus on a fitting room experience where customers try and buy as efficiently as possible.
Cutting out the order, wait and return part of the equation will make their customers happy and their balance sheets a lot healthier.
Lee, you’re absolutely right — retailers need to get creative. Apparel shoppers are buying from Amazon because it’s convenient, especially if you’re buying a low-risk product like leggings or a t-shirt. But many shoppers, including younger generations, prefer buying in-person. Local retailers who carry unique items are in a great position to do really well right now as long as they market themselves effectively and keep innovating in-store.
There is little if anything that can be done to derail or even slow down the fashion juggernaut that Amazon has evolved into. I totally agree with the rest of the comments that Amazon did not create the vast assortments, or come up with the e-commerce model they are so adept at now.
Rather, it’s the fashion immediacy, and changing shopping preferences that have surfaced over the past few years, which has really impacted the specialty apparel segment. Amazon certainly has a presence, a vast diverse fashion marketplace and a very loyal Prime base to capitalize on.
However, all is not lost for specialty fashion apparel retailers. Yes the obvious answer to remain competitive is that they have the physical stores, where retailers could forge relationships with their customers, and serve as a media beacon to help build the brand. What has really resonated lately has been the Macy’s of the world connecting with the local community, local designers and curating the customer experience via experimental pop-ups. Faster fashion isn’t always better but listening and responding to your customers is the key to survival.
Amazon can become the value provider in apparel — offering “non-fashionable” apparel at a competitive or lower price. These items will appeal to the mass market. The only issue with apparel is it not fitting or the customer not liking what they purchased and then the retailer having to deal with returns. Amazon is already dealing with returns, but they may be a bit higher in the apparel category decreasing margins. Walmart and other Amazon competitors can offer try-on in-store options which Amazon cannot do. Also, brick-and-mortar stores can try to grab the attention of their shoppers for apparel offerings when they are in the store to buy other items.
Amazon has moved into another category that brick-and-mortar retailers once owned. Like other categories, the retailers became complacent and Amazon is stealing market share. The retailers can strike back with new and innovative fashions, great customer service and an in-store shopping experience that Amazon cannot deliver.
If there was any doubt that Amazon wants to be big in every retail category — stop doubting it now. It will eventually come down to brand that differentiates. In apparel in particular brand makes a huge difference. If you are in specialty and you don’t have a brand to differentiate you from the competition, you should be nervous. As to Amazon being a master at data — after the Prime Day recommendations I received (OK, not a lot of data points here, just my own) I’m not sure how masterful they really are.
While no apparel retailer is going to compete with Amazon on volume or analytics they can beat them in other ways to survive. For retailers it’s about getting back to basics by identifying the next hot fashion trends, but that will only last so long as Amazon and others join the bandwagon. For upscale specialty retailers, personalized and customer tailored apparel is becoming a growth segment that has propelled new brands like Indochino, eShakti and Sumissura. The idea of mass customization is on the horizon. Coupled with a “surprise and delight” in-store experience, that is a winning combination. A recent suit purchase from an Indochino store proved to be hassle free and the product rivaled suits that are three to four times the price!
Offering a truly unique and fun shopping experience is probably the best way to compete against Amazon. Consumers appreciate the theater of shopping and if you provide personalized and memorable experiences, you will curate loyal brand enthusiasts.
The harsh reality is that Amazon has grown, and will continue to grow, its market share in apparel. Part of that comes down to the shift to online, which is unstoppable.
However, Amazon isn’t just a beneficiary of market dynamics. It has also engineered success through a strong assortment, the development of own-label and some good marketing. The effectiveness of these things has been amplified by the lackluster approach of many traditional apparel retailers.
Developing credible and compelling ranges, thinning out assortments on the shop floor so that stores are easier to shop, developing a targeted lifestyle brand and making stores more engaging are all ways to counter Amazon. Some clothing retailers are doing these things, but many aren’t — which is why Amazon is such a threat to them.
There is nothing unique about the challenges Amazon is putting on the fashion category … it’s the same challenge for most of their categories. SCALE and transactional EASE.
But if you are a fashion brand you will still be successful at the one thing Amazon cannot compete on currently. EXPERIENCE.
Fashion is a deeply personal buying experience, and retailers who cater to those shoppers for products that they cannot easily buy online (leggings and T-Shirts, for instance) can still compete against Amazon. It will put some stress onto fashion retailers for making better product assortment decisions over and above simple store demographics and merchandising. They will have to consider the “Amazon Affect” of certain commodity items now.