Department stores and specialty clothing retailers aren’t short of challenges these days, from declining store and mall traffic to consumers spending more on experiences over material things. And there's an elephant in the room: Amazon.
In the third annual Morgan Stanley AlphaWise apparel survey of nearly 2,000 US consumers in September, the investment banking firm’s equity research team found that Amazon is “rapidly gaining consumer traction in apparel,” especially to the detriment of department stores and specialty retailers.
It found that 69% of consumers, including teens, bought apparel on Amazon.com over the past six months, up from 59% last year, the biggest percentage increase among about 30 retailers in the sample.
More importantly, more than two-fifths of Amazon.com shoppers said they spent more on Amazon in the past year. It was also one of the few retailers where shopper intention to purchase apparel the next 12 months is among the highest, the study showed. Amazon also led with the coveted brand net promoter score of 61%, more than twice Target’s 28% in second place and almost 9 times the average score of the other 28 retailers, according to the study.
In contrast, for department stores and specialty retailers from Kohl’s and JC Penney to Lululemon and Gap, the percentage of consumers who shopped with them the last six months was much lower, at levels ranging from 38% to 6%, according to the survey.
To be sure, studies have showed Amazon’s apparel shoppers traditionally tend to buy basic items like men's socks and underwear, and the Morgan Stanley finding didn’t indicate what kind of apparel items Amazon shoppers bought and if there’s an increased adoption of higher-priced fashion.
However, Amazon’s increased customer overlap with shoppers at many department stores and specialty clothing shops may be an indication that fashion-oriented purchases are occurring. For example, the survey found that an average of 79% of department store shoppers also bought clothing on Amazon.com over the past six months, with the overlap at Nordstrom and Macy’s even higher at 84% and 81% respectively. For specialty apparel chains, the study found Urban Outfitters Inc.’s Free People unit and athletic-apparel chain Lululemon had the greatest increase in customer overlap with Amazon, at 79% and 81% each.
Meanwhile, the study also showed increased Amazon shopping among younger 13-24-year-old shoppers. “This is encouraging for Amazon's future as these shoppers continue to spend more as they age,” the study said.