Amazon is getting one step closer to dominating department stores.
The ecommerce giant is about to tap into one of America's biggest clothing trends by launching its own athleisure brand, making it a competitor to Lululemon, Gap's Athleta, Under Armour, Nike, and other top sportswear brands.
The move will also make Amazon a bigger threat to department stores like Macy's, Nordstrom, and JCPenney, which have been battling years of declining shopper traffic to malls.
Prior to news of its new athleisure brand, Amazon was already expected to surpass Macy's to become the biggest apparel seller in the US this year, according to a 58-page report published by Cowen & Co. in October.
The company's clothing and accessory sales are expected to grow nearly 30% next year, to $28 billion, according to the Cowen analysts. Macy's apparel sales, by comparison, are expected to drop 4%, to $22 billion, in the period.
As Amazon's sales grow, so will its share of the apparel market in the US.
Amazon currently claims about 6.6% of the market. That share is expected to increase to 8.2% by next year and further expand to 16.2% within five years, according to Cowen analysts.
By 2021, Cowen expects Amazon to generate $62 billion in annual apparel sales. TJ Maxx is expected to be the No. 2 clothing seller, with $26 billion in sales, and Macy's is expected to claim the No. 3 spot, with $23 billion in sales.
Over the past couple of years, Amazon has ramped up its investment in fashion by launching its own private-label clothing brands and sponsoring the first New York men's fashion week.
The company has also hired executives from luxury fashion companies, such as Julie Gilhart, the Barneys New York fashion director whom Amazon reportedly hired as a consultant, and Vogue editor Caroline Palmer.
Also in the past few years, Amazon has started to shift its fashion strategy toward offering more high-end designer names such as Zac Posen and Stuart Weitzman.
That shift has had some industry experts scratching their heads. Luxury fashion websites are typically well merchandised and highly curated — not things for which Amazon is necessarily known.
Amazon also has the disadvantage of having no brick-and-mortar stores where shoppers can try on items or return purchases, he said.
But unlike most traditional department stores, Amazon offers free two-day shipping — even for its clothes — through its Prime membership program.
In a survey, shoppers told Cowen that Amazon Prime is the biggest lure for buying clothes on Amazon. They also praised Amazon's customer service and breadth of product reviews.
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