There’s seemingly no end to what Amazon can do.
By Lindsay Rittenhouse
It’s no secret that Amazon (AMZN) is upending retail, with a new bankruptcy filing or store closure announcement coming nearly every day since the beginning of March from traffic starved bricks-and-mortar retailers.
And the digital beast is showing no signs of letting up.
As KeyBanc Capital Markets pointed out in a Wednesday research note, Amazon is continuing to add new private-label brands. Nine of the 14 brands Amazon now offers are exclusive to Prime members. A Prime membership costs $99 a year.
“Amazon is one of the most disruptive forces in retail and technology today,” KeyBanc analyst Edward Yruma said in the note. “We think it will continue to take market share and also benefit as total share accorded to e-commerce continues to grow.”
Amazon’s fashion lines that are exclusive to Prime members include Amazon Essentials, its men’s and women’s basic apparel; Buttoned Down, its men’s dress shirts and Ella Moon, its line of women’s bohemian-style casual clothes. Its fashion lines available to all include Franklin & Freeman, which offers men’s dress shoes; mae, its line of women’s intimate apparel and Society New York, its line of women’s dresses and handbags, according to KeyBanc.
Yruma told TheStreet that the retailers likely to be the most negatively impacted by Amazon’s fashion lines are not Kohl’s (KSS) or J.C. Penney (JCP) but rather Macy’s (M) and specialty stores. Macy’s is already feeling the pressure, along with 13 other specialty and department store retailers planning for massive store closures.
In the KeyBanc note, Yruma specifically highlighted mae, which sells women’s bralettes and panties ranging in price from $16 to $34.50, as a threat to L Brands (LB) , the parent company of Victoria’s Secret.
But, as TheStreet reported, selling lingerie may prove to be difficult to do online as sizing becomes a major issue.
“Yes, the initial fitting is ideal at a store,” Yruma told TheStreet. However, he called Amazon’s line of intimates “replenishment” items, which means once women know the fit they need, they may opt to quickly order a bra, for example, online on the second or third purchase.
“The one issue Amazon is grappling with is that fashion is an emotional purchase,” Yruma said.
Right now, Victoria’s Secret “has done a masterful job” linking its lingerie to its brand, he said. But, as Amazon continues to expand its private-label offerings, he expects it to gain recognition, as well.
If Amazon doesn’t slow down soon, retail will be left completely in the dust.
Corali Lopez-Castro, partner at Kozyak Tropin & Throckmorton’s bankruptcy and commercial litigation practice group, said in a interview that she expects retail bankruptcy filings in 2017 to continue at a pace of more than one a month.
Just in the past few weeks, Wall Street saw bankruptcy filings from sporting goods retailer Gander Mountain, RadioShack successor General Wireless Operations, everyday value price department store operator Gordmans Stores (GMAN) and appliances, electronics and furniture retailer HHGregg (HGG) . Last Wednesday, children’s apparel retailer Gymboree cautioned that it was low on cash and may not survive.
“It’s a catastrophe,” Lopez-Castro said. “It’s hitting every single segment.”
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