Home Technology Amazon.com (AMZN) To Become No. 1 Apparel Retailer By 2017: Cowen

Amazon.com (AMZN) To Become No. 1 Apparel Retailer By 2017: Cowen

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According to Cowen & Company Equity Research, Internet retailer Amazon.com will continue to grow at a rapid clip and likely take over the number one retailer position from Macy’s some time in 2017.

Cowen analysts John Blackledge, John Kernan and Oliver Chen explain why they see Amazon moving to the top of the retail apparel sector. They argue that the new age retailer will be “driven by accelerating purchaser growth due to more selection, rising 1P brand relationships and the best fulfillment. While NKE, UA and other global brands should benefit, “middle of the mall” retailers are at most risk near-term, with longer-term risks to dept. stores and broadlines.”

More on Amazon’s apparel and accessories sales

Amazon’s apparel and accessories sales are leading the “EGM” segment that represents close to 70% of total company revenue. The Cowen team projects that the U.S. apparel business will expand from $16 billion Gross Merchandise Value in 2015 to an amazing $52B in 2020. These numbers will lead to a 5% to 14% increase in U.S. apparel & accessories market share, and to overtake Macy’s as the #1 U.S. apparel retailer by 2017.

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Blackledge et al. argue that much of Amazon’s success is driven by accelerating apparel purchaser growth, and this is backed up by Cowen’s monthly survey data. The analysts highlight that purchaser growth is increasing because of i) much larger selection, ii) first-party branding relationships, iii) superior fulfillment and iv) innovative use of technology.

Amazon dusting the competition

The Cowen report also notes that U.S. apparel purchaser growth is accelerating, up 36% y/y in the first half of this year compared to 28% in 2014 and much faster than overall EGM purchaser growth. Given apparel purchaser decrease at Wal-Mart and Target for over a year now, Amazon’s apparel purchasers are 34% higher than target and 2% higher than Wal-Mart.


The analysts also point out that a comparison of Amazon, Target and Wal-Mart customers shows that Amazon continues to increase penetration of their customer bases. Over 11% of Target and Wal-Mart apparel customers also purchased clothes-related items at Amazon compared to 8% in the first half of 2014. Related to this, Blackledge and colleagues project that Target and Wal-Mart’s share of the U.S. retail apparel market will be”flat to down ’15-’20.”

Strong brand relationships


Amazon’s large product diversity advantage is directly related to the company’s strong and growing brand relationships The Cowen analysts point to 118 brands with products sold on a first party basis. Nike has more than 90,000 listings and Ralph Lauren tops 25,000 listings, almost all third-party. PVH (Calvin Klein, Tommy Hilfiger), Columbia, Fossil and Kate Spade each have more than 1,000 first party listings.

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