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08/19/2021

Amazon takes on department stores

The retailer is looking to build stores that can highlight its strong apparel portfolio, particularly within private label, electronics and more.
Dan Ochwat
Executive Editor
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Online behemoth Amazon has physical book stores, convenience locations and grocery stores. Reportedly, department stores are up next.

According to a report in The Wall Street Journal, Amazon is looking to open physical stores that highlight its apparel, home and housewares goods, electronics, general merchandise, and more. Each of these categories are areas where it has a huge presence in private label online, especially within apparel, a category that represents a large percentage of its private brand assortment. Coresight Research, for example, counted 112 of Amazon’s 149 private brands in clothing, leading all categories.

The retailer touts the private brands Amazon Basics, Amazon Essentials, Spotted Zebra, Solimo and many more within these apparel, beauty and general merchandise categories. The online retailer does present a large apparel portfolio that could easily anchor a department store setting, different from how it leverages influencers for online buzz.

Apparel is also a hot category with mass merchants like Target and Walmart growing their focus in the area. Walmart this year launched its first elevated apparel brand in Free Assembly, and Target just announced that apparel led all categories in sales in the second quarter.

The WSJ article said the Amazon retail stores would be around 30,000 square feet, much smaller than a traditional department store at around 100,000 square feet. JCPenney and Macy’s have both been active launching apparel private brands at their respective locations, something Amazon can challenge.

Most recently, Macy’s introduced a new apparel line called And Now This, described as ready-to-wear fashion for a contemporary dresser. The clothing is billed for men and women.

For JCPenney, the retailer is leaning heavily into own brands, launching Stylus for Men in June and Ryegrass in late May, a luxurious women’s collection. Those joined recent launches such as a swimwear collection — Mynah, Decree and Sonnet Shores — the Xersion athletic line and the Stylus athleisure line. Additionally, there have been two new home goods brands with Loom + Forge and Linden Street.

Another key department store, Nordstrom also carries a strong apparel private label program and often partners on exclusive programs. For example, it just recently broadened an exclusive partnership with the Topshop and Topman apparel in North America.

The company’s Nordstrom Made brand is also pivotal to its success and a beacon for sustainable programs at the retailer.

In electronics, Amazon has an incredibly strong portfolio through its Fire products and more.

The WSJ article said the idea of what merchandise will be housed in the Amazon department store locations is still fluid, and the first locations are expected to rollout in California and Ohio. Read the article here.

Amazon’s evolution into brick-and-mortar started around technology, with its convenient, Amazon Go stores that promoted its cashier-less technology, but following that, the Amazon Books locations and its grocery stores Amazon Fresh focused more on traditional shopping that also has technology upgrades and capabilities.

The grocery store, in particular, proudly launched a new store brand Aplenty to anchor its center store offerings and strategy. In the second quarter, Amazon reported double-digit sales growth within its physical retail stores.