U.S. markets closed
  • S&P 500

    3,911.74
    +116.01 (+3.06%)
     
  • Dow 30

    31,500.68
    +823.32 (+2.68%)
     
  • Nasdaq

    11,607.62
    +375.43 (+3.34%)
     
  • Russell 2000

    1,765.74
    +54.06 (+3.16%)
     
  • Crude Oil

    107.06
    +2.79 (+2.68%)
     
  • Gold

    1,828.10
    -1.70 (-0.09%)
     
  • Silver

    21.13
    +0.09 (+0.42%)
     
  • EUR/USD

    1.0559
    +0.0034 (+0.33%)
     
  • 10-Yr Bond

    3.1250
    +0.0570 (+1.86%)
     
  • GBP/USD

    1.2270
    +0.0009 (+0.07%)
     
  • USD/JPY

    135.2100
    +0.2770 (+0.21%)
     
  • BTC-USD

    21,424.60
    -2.69 (-0.01%)
     
  • CMC Crypto 200

    462.12
    +8.22 (+1.81%)
     
  • FTSE 100

    7,208.81
    +188.36 (+2.68%)
     
  • Nikkei 225

    26,491.97
    +320.72 (+1.23%)
     

Goldman: You'll be buying more of your clothes on Amazon soon

Jeff Bezos in Washington January 28, 2016. REUTERS/Gary Cameron

Retail chains, such as Macy’s (M), Nordstrom (JWN), and Kohl’s (KSS), have released dismal earnings recently, and a new Goldman Sachs report predicts business could get worse for brick-and-mortar apparel stores.

On the other hand, the same report notes that Amazon (AMZN) has made great strides in the apparel realm — and could dominate the market even more in the future.

While Amazon doesn't reveal category sales, the Goldman report estimates that apparel and accessories represent $10 billion in sales for the "everything store"; that's 20% of the online apparel and accessories market. Macy's, the next-biggest player in the online apparel market, has just $5.2 billion in sales.

Numerous factors drive Amazon’s impressive apparel sales, including the fact that a lot of brands sell on Amazon’s website or directly to Amazon’s buyers. While existing brands say sales on amazon.com represent about 1%-4% of their overall sales, this may increase in future years given Amazon’s popularity among younger people.

Goldman Sachs noted: “Many wholesale brands still do not sell directly to amazon.com, but access to more brands – which we believe is coming – supports further growth ahead.” Later in the report, Goldman added, "We believe it is a matter of time before more brands end up selling directly on amazon.com, largely because they need to migrate to where consumer traffic is."

Moreover, Goldman said, Amazon isn't viewed as a "brand dilutive channel," meaning people will still value the value of a pair of 7 jeans, for example, even if they can buy them on Amazon.

Brick-and-mortar growth has flatlined and is expected to decline.
Brick-and-mortar growth has flatlined and is expected to decline.

The online apparel industry in general has been growing recently — at a rate of 20% over the past few years, according to Goldman. On the other hand, brick-and-mortar has flatlined, and Goldman predicts a drop-off in sales for mall-based retailers like Macy's and Nordstrom. The apparel sales future looks bright for Amazon, though.

Read more:

Study reveals how the rich — and poor — spend their money

Why American Airlines' new rewards program will cost you more money

The chip card rollout has been a nightmare for everyone involved

3 guaranteed tips to save money on summer travel