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Translated by
Nicola Mira
Published
Jun 22, 2017
Reading time
2 minutes
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Amazon's Prime Wardrobe launch shakes up Wall Street

Translated by
Nicola Mira
Published
Jun 22, 2017

Perry Ellis, Foot Locker, Columbia Sportswear, G-III Apparel, VF Corp, Dick's Sporting Goods, JC Penney, Kohl’s, Nordstrom and Macy’s: their share prices, like those of other US apparel groups, have fallen sharply after Amazon announced the launch of its home delivery service featuring boxes containing a range of fashion items. The stock market shock-wave is less indicative of the real impact of the Prime Wardrobe service, than it is a sign of the apparel industry's constant insecurity in confronting the US giant led by Jeff Bezos.


The Prime Wardrobe service includes free returns and quantity discounts based on the number of items consumers decide to keep - Amazon


Though Amazon's fashion box could actually have a heavy impact on smaller companies, which have grown using the same business model, the fear that a pure player may render brick-and-mortar retailing obsolete has long ago proven to be groundless. And in the wake of Amazon's mammoth acquisition of the Whole Foods store chain, the stock exchange psychosis following the launch of Amazon Fashion is yet another proof of the knee-jerk reactions the US group can cause.

Several analysts actually think that Amazon's new approach could potentially benefit some apparel groups in the USA, where Prime Wardrobe will initially be deployed. The Wells Fargo bank reckons that PVH, VF Corp, Carter’s and even the Nike group may profit from it, despite some pricing pressure, notably because of the partnerships they have already set up with Amazon.

Conversely, a strengthening of the relationship between Nike and Amazon has caused warning bells to go off for shareholders in sporting goods chains. This is why Foot Locker and Dick's Sporting Goods, two established players, suffered share price downturns of over 5% in the first day after the launch of Prime Wardrobe.


The stock market reaction after Amazon's announcement shows the apparel industry's anxiety with the US pure player - Bloombert


In the 2016 fiscal year, Amazon generated sales worth $135 billion, up 27% year-on-year, with an operating income of $4.2 billion, compared to $2.2 billion a year earlier. And although the group did not publish product category details, it stated that fashion ranks among its best-selling lines. Also, Amazon has highly ambitious plans for its fashion business, and it is expected to launch some of its own labels in the UK, after discreetly patenting their names last year: The brands, Franklin & Freeman, Franklin Tailored, James & Erin, Lark & Ro, Society New York, North Eleven and Scout+Ro.

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