Can Amazon prove it has style?
Clothing stores are disappearing across America by the tens of thousands, but even the so-called retail apocalypse isn’t enough to scare Amazon away from the apparel business.
The company has announced that it will open its first clothing store, called Amazon Style, later this year in a strip mall in suburban Los Angeles. The 30,000 square foot space will offer men’s and women’s apparel from well-known and emerging brands at prices up to $400. Although it looks like a typical department store, what’s different is the use of technology. Amazon Style customers will use an app to facilitate most of their purchases.
Santiago Gallino, a professor of operations, insights and decisions at Wharton, said a physical store is an important next step for Amazon, but there’s no guarantee the company will succeed where so many other retailers have failed. , especially lately. More than 80,000 stores are expected to close by 2026, devastated by financial difficulties, declining sales, high rents and pandemic-related issues.
“It will be an interesting challenge for them because the fashion industry is one that requires excellent execution,” he said during an interview with Wharton Business Daily on SiriusXM. (Listen to the podcast above.) “We have yet to see if Amazon can do something as awesome as they have in the online space.”
Fashion is capricious, consumers too. Clothing stores need to offer desirable styles in a range of sizes or else they risk customers going elsewhere to find what they want. Availability is critical to the success of clothing stores, Gallino explained, but so is the shopping experience. In-store customers are looking for great service, personalized attention, and perks they can’t get from shopping on a tablet while lounging on the couch.
“It will be a challenge for them because the fashion industry is one that requires excellent execution.” –Santiago Gallino
Amazon certainly has experience with physical stores. The company opened Amazon Go, Amazon 4-Star and operates Whole Foods. But Gallino said as a customer of those stores he was “a bit disappointed”.
“There’s nothing wrong with these locations, but there’s nothing game-changing that will make me think of Amazon as my first stop when going to a physical store, as it probably is when I think about my online transactions,” he said. “I still wonder how much disruption they can create in the physical world, and for me, that remains to be seen.”
Amazon said in a statement that it plans to provide a technology-driven shopping experience in the California store. An app will allow shoppers to request items be sent to a fitting room or directly to the pickup counter, find different sizes and colors, and explore similar items.
“Amazon Style is built around personalization,” the company said. “Our machine learning algorithms produce real-time, personalized recommendations for each customer as they shop.”
The omnichannel experience
The professor pointed out that many retailers have realized the value of an omnichannel strategy that seamlessly integrates online and offline shopping. Even digital native companies like Warby Parker have opened physical stores to expand their reach. Gallino said savvy brands know it gets harder over time to attract new customers online, so building a physical store is an opportunity to entice shoppers with the promise of an experience.
“I think Warby Parker got it really well,” Gallino said. “If you think of your business as an omnichannel business, it makes sense to think of offers in the same terms. You are going to take care of your customer, whether that customer contacts you online or in a physical store. »
Amazon Style is also a way for the company to compete in the clothing segment with Target and Walmart, both of which sell a significant amount of clothing in hundreds of stores across the country. That’s a high bar for Amazon to cross, Gallino said. But with online retail only accounting for around 13% of all retail sales, it makes sense for Amazon to give it a try.
“I think it’s a decision that makes sense, but it’s not easy,” he said.