Amazon just hammered another 'nail in the coffin' for Macy's, Sears, and JCPenney (AMZN)

pulse

June 22, 2017 4:25 PM

Amazon's Prime Wardrobe program may have just scratched the only reason people still go to department stores.

Amazon Fashion is poised to take over apparel.

With its Prime Wardrobe program, Amazon has rocked yet another industry: Apparel.

into

Industry stalwarts like Macy's, Sears, and JCPenney have already struggled to adapt to growing competition from e-commerce and waning mall traffic.

Prime Wardrobe sends customers up to 15 clothing items to try on for free at home. Returns are nearly effortless, meaning Amazon has removed the greatest uncertainty of buying clothes online.

Amazon is also offering enticing promotions: the more you buy, the cheaper it is. If you buy 5 items, you get a full 20% off. If customers choose to keep none of the items, there's no penalty and everything can be packed back into the resealable box and left on the front porch.

"Simply put, it’s a negative," for department stores, the Wells Fargo analysts wrote in the note.

Amazon's growing apparel business is yet another blow to traditional players in the industry. The retailer is expected this year to surpass Macy's to become the biggest apparel seller in the US, according to Cowen & Co.

Amazon has a greater selection of apparel than any one department store. As it offers up more of the brands consumers want — including luxury and designer — customers may find the convenience makes it difficult to shop anywhere else.

Just this week, reports stated that Amazon may begin selling Nike directly through its website through a deal with the sports apparel maker. Nike was one of the notable wholesale holdouts still not selling directly on Amazon, but even the largest sportswear maker in the world can't deny the allure of Amazon's younger, affluent customers.

It's not bad news for everyone in the apparel industry, however. The creation of Prime Wardrobe just creates another channel for companies creating sought-after products, looking to grow faster, like Nike, according to Wells Fargo.

pulse