Amazon.com, Inc. (AMZN) To Replace Macy’s, Inc. (M) as The Top-Most US Clothing Retailer


It is possible Amazon.com, Inc. (NASDAQ:AMZN) could become the top U.S. apparel retailer within the next two years, dethroning Macy’s, Inc. (NYSE:M) in the process, according to Cowen. Amazon is also growing its apparel customer base faster while rivals Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT) are battling shrinking numbers.

According to John Blackledge of Cowen and his team of analysts, Amazon.com, Inc. (NASDAQ:AMZN) could be on top of things among the U.S. clothing retailers by 2017.

Amazon’s apparel share at 14%

The analysts predict that Amazon’s share of the U.S. apparel market will jump to 14% from the current 5% by 2020. By that time, Amazon would have overtaken Macy’s as the U.S. No.1 apparel retailer. Additionally, Cowen sees Amazon’s gross merchandise value (GMV) hitting $52 billion in 2020, up from $16 billion in 2015.

70% of revenue from EGM

Amazon entered the apparel market in 2002. Apparel and accessories sales have been driving sales in the company’s electronics and general merchandise (EGM) segments. Fashion is not only one of the fastest growing verticals at Amazon, but also boasts more than 40 million customers. Today, Amazon’s EGM contributes nearly 70% of the company’s total revenue.

Amazon.com, Inc. (NASDAQ:AMZN) is not only a serious headache to Macy’s on the apparel front, but also to Target and Wal-Mart. Cowen has established that while Amazon is growing its apparel customer base, the same is shrinking at Target and Wal-Mart. For example, in the past six quarters, Cowen noted that the number of Amazon’s apparel purchases rose 22% year-over-year, while Target and Wal-Mart noted a 2% and 3% decline in their numbers, respectively, in the same period.

Amazon continues to cause distress at both Target and Wal-Mart in more ways. In the first half of 2015, Cowen says that 11% of apparel purchases at Wal-Mart and Target made purchases at Amazon too. That indicates an increase given that the number was 8% in the first half of 2014.

Amazon’s innovative Prime membership

Amazon.com, Inc. (NASDAQ:AMZN) is using its Prime loyalty program to woo customers from other retail providers. Costing $99 a year, Prime membership includes free delivery, Amazon Instant Video and other benefits. Prime members usually spend more money on Amazon.com than average users, and could be the reason Amazon is thriving in the apparel sector where many are struggling.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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