The doom and gloom has been overplayed, suggests Neil Saunders, managing director at GlobalData Retail. “While neither Marshalls nor TJMaxx has fallen out of favor with consumers, the amount of discounting and markdown activity across the apparel sector resulted in the customers of both chains shopping more widely than usual,” Saunders says.
“You need to think about how to make your business as un-Amazonable as possible,” advises Oliver Chen, an analyst with Cowen & Co.
“One of the advantages the off-price retailers have is the poor performance of the main department store brands,” says Steve Montgomery, president of b2b Solutions. “As the majors falter, the off-price retailers continue to gain access to more and more inventory. The danger comes when either the major department store brands learn how to better manage inventory or get out of the business completely.”
Amazon occasionally makes noise about getting more serious about the category and is said to be exploring custom-fit apparel. The company’s apparel sales last year are estimated at $22 billion by Cowen & Co., including clothing sold directly to consumers plus its cut on apparel sold by third parties through Amazon Marketplace.
Cowen estimates that Amazon now accounts for about 6.6 percent of the retail apparel market and forecasts it will climb to around 16 percent by 2021. Off-price retailers currently control about 19 percent of the apparel market, estimates research firm Morningstar, up from 15 percent five years ago.
“The category is taking massive amounts of share,” says Bridget Weishaar, senior consumer discretionary equity manager for Morningstar. “It is a trend that we don’t see turning around in the near future.”
Source: Kantar Retail