Amazon Could Reach $60B in Apparel Sales
It's no secret that Amazon has been doubling down on its apparel strategy, looking to become the top online retailer of clothing. It looks like all its latest moves could pay off big for the e-commerce site's future, according to Investopedia.
According to the site's predictions, Amazon could obtain 25 percent of market share by 2020, which would equate to about $60 billion in revenue.
With that in mind, Fitch Ratings took a look at what would happen to other retailers if these predictions came true. It turns out it does not look good for J.C. Penney, Dillard's and other mid-tier departmet stores.
“All investment-grade department store retailers would be challenged to retain their investment-grade rating in this retail stress scenario (excluding management response), and several other smaller or already challenged apparel-focused retailers would face sharply elevated risks of financial distress,” a team of Fitch analysts said, according to Investopedia.
The Fitch analysts also predicted that, with a sharp decline of this magnitude, regional malls would be another group to feel the repercussions.
And, why does Fitch believe Amazon has such a big upper hand in this oversaturated market?
“With good access to external capital and internally generated cash, Amazon has the ability to borrow and invest heavily as part of a strategy to gain apparel market share quickly,” the analysts wrote. “Fitch anticipates a significant market share gain in apparel would be accomplished through the successful introduction of private label clothing brands, along with some vendor wins, particularly in the more basics-oriented spectrum of fashion. Fitch does not anticipate successful migration of traditional department store brands to the online channel in this scenario.”
Although it's still probably too early to say for sure whether or not Amazon will truly be the apparel powerhouse it's slated to be, it's probably not too far off the mark. But, only time will tell.
Hannah Abrams is the senior content editor for Promo Marketing. In her free time, she enjoys coming up with excuses to avoid exercise, visiting her hometown in Los Angeles and rallying for Leonardo DiCaprio to win his
first second Academy Award.