Amazon to open first retail clothing store

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Amazon to open first retail clothing store

Post by Brian Lutz »

https://komonews.com/news/local/amazon- ... 01-20-2022

The store will open at the Americana at Brand in Glendale CA and will be roughly the size of a Kohl's store (30,000 square feet), but will show only one of each item on the sales floor with the rest kept in the stockroom, which reportedly allows them to stock roughly twice as many styles as a typical clothing store.
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Re: Amazon to open first retail clothing store

Post by Jeff »

It looks like they are taking over the former 2 story Forever 21 store that closed at the Americana in 2019 or 2020. This location is directly across the street from the Galleria (F21 had a store in the Galleria as well).
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Re: Amazon to open first retail clothing store

Post by pseudo3d »

Brian Lutz wrote: January 20th, 2022, 9:34 am https://komonews.com/news/local/amazon- ... 01-20-2022

The store will open at the Americana at Brand in Glendale CA and will be roughly the size of a Kohl's store (30,000 square feet), but will show only one of each item on the sales floor with the rest kept in the stockroom, which reportedly allows them to stock roughly twice as many styles as a typical clothing store.
I know that Kohl's has wanted to downscale, but Kohl's stores aren't usually 30,000 feet. Usually they're comparable to the size of a Target on average.

The whole thing seems overly complicated--how do they handle customers who don't want to use their smartphones or be tied to Amazon.com's algorithms and logins? How do they deal with just the impulse shoppers who don't want dressing rooms and just want to drape clothing (sometimes still on hangers) in front of them to see if the colors work and how they might look? How labor-intensive is it to "order" clothing for the fitting rooms and have them in the fitting room in a timely fashion?

It all hearkens back to how catalog showrooms died in the first place, but with none of the things that made them interesting, fun, or convenient.

The problem with existing apparel-oriented department stores stores today are all visible, fixable problems, mostly involving staffing, service, and merchandise mix. Competently executing on all those fronts should make Amazon's store a success...not trying to reinvent the wheel.
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Re: Amazon to open first retail clothing store

Post by buckguy »

I doubt that the app is much of a barrier, esp. for the demographic that they will cultivate. I'm often amused at the time and effort people waste struggling with Apple/Google pay apps when they check-out when tapping a card usually goes faster, but there are a lot of people who seem compelled to use tech, no matter how impractical it is.

A more pressing issue is probably whether their prowess with software will actually deliver what people want to buy. I went to Amazon Fresh last night---mostly to kill time while waiting for takeout and I was impressed at what an obvious fail it is---very heavy on refrigeration (probably the majority of the merchandise) and the produce has slow sellers like jackfruit. It just seems very overhead heavy and no customers. I also had problems with the app because it was so slow to load.

Having just one item on the floor isn't going to work if its only in one size or color. Most people want to see how different colors work and make some guess at how things will fit based on what's on the floor before bothering with a fitting a room. The labor to deliver merchandise that people actually want seems like it would undercut the value of having so many styles on the floor. "Curation" is not exactly new--just about any retail app has that, so I don't know what advantage they expect and relying on house brands means they think they have some brand equity for clothing which I suspect isn't the case.

Softlines aren't "perishable" like food, but if you have the wrong merchandise--style, size whatever, you're stuck with stuff that needs to be cleared at much reduced prices---they could always put it into a different channel but that's an expensive task. Clothing requires some risk because even with "just in time delivery" you still have to plan ahead of time what you expect will sell and its still easy to get stuck with the wrong colors or have excess seasonal merchandise if the weather doesn't cooperate. You also need to maintain "inventory" even if someone could easily order something out of stock from their phone. Given the current supply chain issues, this probably isn't the best time to start selling apparel, anyway. My takeaway from Amazon Fresh is that despite Amazon's software investment, they aren't delivering what people want to buy and if they have the same lack of basic merchandising sense, the same will happen with clothing lines. At least they won't be burdened with big utility bills from freezers and refrigerated cases.
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Re: Amazon to open first retail clothing store

Post by ClownLoach »

I am still baffled as to why Amazon doesn't just go out and write checks at this point. This sounds like another debacle. A massively high rent location in one of the most expensive retail centers in the world (the Rick Caruso owned Americana). Because of the massive rents and despite the high profile location practically every tenant at the Americana has turned over at least twice except for Apple, Nordstrom and Barnes and Noble (who has a oddball 3rd floor space that is probably lesser rent as a result).

Kohl's and Macy's are still under attack by hostile investors who basically want to extract the valuable assets (real estate) and set up unsustainable leasebacks that will result in the complete liquidation of the chains within a few years. Buying either company and getting someone who actually knows how to run a clothing store would basically cost mere pennies to Amazon. They can take something that works and test out tweaks adding Amazon tech to integrate the platforms and attempt to get the business growing again - but they would already have the infrastructure and customer traffic flow. Amazon would actually be able to argue if challenged by antitrust lawyers that they are saving Macy's and/or Kohl's from a guaranteed future liquidation thereby protecting consumer choice.

They should have bought Target instead of trying to do Amazon Fresh. Realistically we all think of Target as a massive retailer, but the reality is that they bring in only a tiny fraction of the revenue of Walmart. Target does $77B in sales while Walmart does $553B. The average regional division of Walmart does more sales than all of Target. Kroger is a much larger company than Target too. Heck - CVS Retail Division does $86B which is more than Target - and their overall enterprise brings in $250B a year. If CVS wanted to buy out Target they have the resources and size to fund that merger. And Target has somehow figured out a way to run a small format, highly productive integrated grocery store with general merchandise with the small express stores. (Yes there have been a few bad real estate decisions made where a store closed after only a few years, but they're still building hundreds of them). The small format Target makes much more sense than the Amazon Fresh store does at this point. And the relatively small size of Target despite their dominant performance on the West Coast would allow Amazon to acquire them without challenge although it's a bigger bite to swallow.

Amazon Fresh did have a fantastic launch in the first few stores with massive home deliveries but that was clearly pandemic driven and that business was not sustained. Amazon clearly does not understand how to run a well merchandised, exciting, effective and "sticky" retail store that becomes a permanent part of the customer's shopping routine. The fact that they have now built boxes everywhere that are sitting mothballed reminds me of Fresh and Easy - they did the same thing after opening the first wave of stores expecting lines around the block that never materialized. I really wonder how much longer they're going to play with what is clearly a money losing enterprise here before they recognize that they need to grow through acquisition - and also learn from the mistakes made with the Whole Foods deal (WF was right in the middle of restructuring and cutbacks that completed at the same time as the deal closing, so Amazon got blamed for all of the negative changes before they had even integrated the company).
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Re: Amazon to open first retail clothing store

Post by pseudo3d »

ClownLoach wrote: January 22nd, 2022, 12:53 pm I am still baffled as to why Amazon doesn't just go out and write checks at this point. This sounds like another debacle. A massively high rent location in one of the most expensive retail centers in the world (the Rick Caruso owned Americana). Because of the massive rents and despite the high profile location practically every tenant at the Americana has turned over at least twice except for Apple, Nordstrom and Barnes and Noble (who has a oddball 3rd floor space that is probably lesser rent as a result).

Kohl's and Macy's are still under attack by hostile investors who basically want to extract the valuable assets (real estate) and set up unsustainable leasebacks that will result in the complete liquidation of the chains within a few years. Buying either company and getting someone who actually knows how to run a clothing store would basically cost mere pennies to Amazon. They can take something that works and test out tweaks adding Amazon tech to integrate the platforms and attempt to get the business growing again - but they would already have the infrastructure and customer traffic flow. Amazon would actually be able to argue if challenged by antitrust lawyers that they are saving Macy's and/or Kohl's from a guaranteed future liquidation thereby protecting consumer choice.

They should have bought Target instead of trying to do Amazon Fresh. Realistically we all think of Target as a massive retailer, but the reality is that they bring in only a tiny fraction of the revenue of Walmart. Target does $77B in sales while Walmart does $553B. The average regional division of Walmart does more sales than all of Target. Kroger is a much larger company than Target too. Heck - CVS Retail Division does $86B which is more than Target - and their overall enterprise brings in $250B a year. If CVS wanted to buy out Target they have the resources and size to fund that merger. And Target has somehow figured out a way to run a small format, highly productive integrated grocery store with general merchandise with the small express stores. (Yes there have been a few bad real estate decisions made where a store closed after only a few years, but they're still building hundreds of them). The small format Target makes much more sense than the Amazon Fresh store does at this point. And the relatively small size of Target despite their dominant performance on the West Coast would allow Amazon to acquire them without challenge although it's a bigger bite to swallow.

Amazon Fresh did have a fantastic launch in the first few stores with massive home deliveries but that was clearly pandemic driven and that business was not sustained. Amazon clearly does not understand how to run a well merchandised, exciting, effective and "sticky" retail store that becomes a permanent part of the customer's shopping routine. The fact that they have now built boxes everywhere that are sitting mothballed reminds me of Fresh and Easy - they did the same thing after opening the first wave of stores expecting lines around the block that never materialized. I really wonder how much longer they're going to play with what is clearly a money losing enterprise here before they recognize that they need to grow through acquisition - and also learn from the mistakes made with the Whole Foods deal (WF was right in the middle of restructuring and cutbacks that completed at the same time as the deal closing, so Amazon got blamed for all of the negative changes before they had even integrated the company).
I live nowhere near an Amazon Fresh, but from what I hear, they have no idea how to merchandise end-cap displays, something every other grocer has figured out. If they purchase another company (especially a grocery company), I don't trust them not to get rid of the people who make it a success and/or not try to force some half-baked Amazon integration into the mix. When it comes to grocery, they should actually hire people who know how to run stores, not "technology experts", and the problems with Amazon Fresh should fix themselves. Maybe even come up with a new name to distance themselves from its parent company.

Likewise, Amazon buying Kohl's or Macy's sounds like a nice idea--pouring resources in to improve merchandise mix and staffing, figuring out how to use those stores' large sizes, and actually making them attractive places to shop again...but you KNOW that won't happen. Reality is Amazon Prime gimmicks, more focus on curbside pickup, different methods of stocking, but not fixing any of the core problems.
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Re: Amazon to open first retail clothing store

Post by babs »

ClownLoach wrote: January 22nd, 2022, 12:53 pm I am still baffled as to why Amazon doesn't just go out and write checks at this point. This sounds like another debacle. A massively high rent location in one of the most expensive retail centers in the world (the Rick Caruso owned Americana). Because of the massive rents and despite the high profile location practically every tenant at the Americana has turned over at least twice except for Apple, Nordstrom and Barnes and Noble (who has a oddball 3rd floor space that is probably lesser rent as a result).

Kohl's and Macy's are still under attack by hostile investors who basically want to extract the valuable assets (real estate) and set up unsustainable leasebacks that will result in the complete liquidation of the chains within a few years. Buying either company and getting someone who actually knows how to run a clothing store would basically cost mere pennies to Amazon. They can take something that works and test out tweaks adding Amazon tech to integrate the platforms and attempt to get the business growing again - but they would already have the infrastructure and customer traffic flow. Amazon would actually be able to argue if challenged by antitrust lawyers that they are saving Macy's and/or Kohl's from a guaranteed future liquidation thereby protecting consumer choice.

They should have bought Target instead of trying to do Amazon Fresh. Realistically we all think of Target as a massive retailer, but the reality is that they bring in only a tiny fraction of the revenue of Walmart. Target does $77B in sales while Walmart does $553B. The average regional division of Walmart does more sales than all of Target. Kroger is a much larger company than Target too. Heck - CVS Retail Division does $86B which is more than Target - and their overall enterprise brings in $250B a year. If CVS wanted to buy out Target they have the resources and size to fund that merger. And Target has somehow figured out a way to run a small format, highly productive integrated grocery store with general merchandise with the small express stores. (Yes there have been a few bad real estate decisions made where a store closed after only a few years, but they're still building hundreds of them). The small format Target makes much more sense than the Amazon Fresh store does at this point. And the relatively small size of Target despite their dominant performance on the West Coast would allow Amazon to acquire them without challenge although it's a bigger bite to swallow.

Amazon Fresh did have a fantastic launch in the first few stores with massive home deliveries but that was clearly pandemic driven and that business was not sustained. Amazon clearly does not understand how to run a well merchandised, exciting, effective and "sticky" retail store that becomes a permanent part of the customer's shopping routine. The fact that they have now built boxes everywhere that are sitting mothballed reminds me of Fresh and Easy - they did the same thing after opening the first wave of stores expecting lines around the block that never materialized. I really wonder how much longer they're going to play with what is clearly a money losing enterprise here before they recognize that they need to grow through acquisition - and also learn from the mistakes made with the Whole Foods deal (WF was right in the middle of restructuring and cutbacks that completed at the same time as the deal closing, so Amazon got blamed for all of the negative changes before they had even integrated the company).
The FTC would never approve a Target Amazon merger. Why try when it wouldn't be approved. The acquisition of Whole Foods was different for two reasons. One, Amazon did not have a significant share of the grocery market. Two, the purchase of Whole Foods did not change the competitive landscape of the grocery industry since the industry is fairly fragmented. Merging Target and Amazon would reduce competition significantly and that's the difference the FTC would look at. Same reason why I don't see Amazon and Kohl's merging. Arguably Kohl's is probably the only department store (really clothing store) of any scale doing decently well.
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Re: Amazon to open first retail clothing store

Post by ClownLoach »

babs wrote: January 22nd, 2022, 9:59 pm
ClownLoach wrote: January 22nd, 2022, 12:53 pm I am still baffled as to why Amazon doesn't just go out and write checks at this point. This sounds like another debacle. A massively high rent location in one of the most expensive retail centers in the world (the Rick Caruso owned Americana). Because of the massive rents and despite the high profile location practically every tenant at the Americana has turned over at least twice except for Apple, Nordstrom and Barnes and Noble (who has a oddball 3rd floor space that is probably lesser rent as a result).

Kohl's and Macy's are still under attack by hostile investors who basically want to extract the valuable assets (real estate) and set up unsustainable leasebacks that will result in the complete liquidation of the chains within a few years. Buying either company and getting someone who actually knows how to run a clothing store would basically cost mere pennies to Amazon. They can take something that works and test out tweaks adding Amazon tech to integrate the platforms and attempt to get the business growing again - but they would already have the infrastructure and customer traffic flow. Amazon would actually be able to argue if challenged by antitrust lawyers that they are saving Macy's and/or Kohl's from a guaranteed future liquidation thereby protecting consumer choice.

They should have bought Target instead of trying to do Amazon Fresh. Realistically we all think of Target as a massive retailer, but the reality is that they bring in only a tiny fraction of the revenue of Walmart. Target does $77B in sales while Walmart does $553B. The average regional division of Walmart does more sales than all of Target. Kroger is a much larger company than Target too. Heck - CVS Retail Division does $86B which is more than Target - and their overall enterprise brings in $250B a year. If CVS wanted to buy out Target they have the resources and size to fund that merger. And Target has somehow figured out a way to run a small format, highly productive integrated grocery store with general merchandise with the small express stores. (Yes there have been a few bad real estate decisions made where a store closed after only a few years, but they're still building hundreds of them). The small format Target makes much more sense than the Amazon Fresh store does at this point. And the relatively small size of Target despite their dominant performance on the West Coast would allow Amazon to acquire them without challenge although it's a bigger bite to swallow.

Amazon Fresh did have a fantastic launch in the first few stores with massive home deliveries but that was clearly pandemic driven and that business was not sustained. Amazon clearly does not understand how to run a well merchandised, exciting, effective and "sticky" retail store that becomes a permanent part of the customer's shopping routine. The fact that they have now built boxes everywhere that are sitting mothballed reminds me of Fresh and Easy - they did the same thing after opening the first wave of stores expecting lines around the block that never materialized. I really wonder how much longer they're going to play with what is clearly a money losing enterprise here before they recognize that they need to grow through acquisition - and also learn from the mistakes made with the Whole Foods deal (WF was right in the middle of restructuring and cutbacks that completed at the same time as the deal closing, so Amazon got blamed for all of the negative changes before they had even integrated the company).
The FTC would never approve a Target Amazon merger. Why try when it wouldn't be approved. The acquisition of Whole Foods was different for two reasons. One, Amazon did not have a significant share of the grocery market. Two, the purchase of Whole Foods did not change the competitive landscape of the grocery industry since the industry is fairly fragmented. Merging Target and Amazon would reduce competition significantly and that's the difference the FTC would look at. Same reason why I don't see Amazon and Kohl's merging. Arguably Kohl's is probably the only department store (really clothing store) of any scale doing decently well.
The FTC wouldn't raise an issue at all. Target does not have a significant "traditional" e-commerce business - they eliminated their e-commerce DC's several years ago as they were not busy enough and all the orders come from the closest store to the customer. So the e-commerce businesses have minimal overlap. Target true ship to customer e-commerce business added to Amazon would be such a tiny increase it would be like a rounding error.

Amazon does not have a retail discount store business, Target does. Amazon does not have a significant mainstream grocery store business, Target does (Whole Foods is a specialty). The reason an Amazon-Target merger would be a slam dunk is the fact that both companies fill in the gaps in the other business with almost zero significant overlap. Every few months a financial pundit will suggest the same transaction because they know it would go through.

FTC looks at when competition in the same category of business overlaps and results in a monopoly in the category. The Amazon Fresh stores are money losers and low volume so they would not be a significant obstacle and I'm sure they would close them all prior to finalizing a bid. What else is a true significant overlap between the two?

The reality is that Walmart is growing slower than they would like to, but they are almost 7 times larger than Target. Target is surprisingly small and fragile by comparison. Walmart could do a price cut campaign and wipe Target off the map with surprising efficiency. Walmart could take a quarter of Target's total revenue and it would only result in a low single digit sales increase for them. They are going to get squashed unless they get bigger, fast. Amazon is 4 times larger than Target. How much more competitive would Target be if they could improve margins with greater purchasing power that would come from Amazon ownership? Target is still being left behind in the battle between Amazon vs Walmart.
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Re: Amazon to open first retail clothing store

Post by storewanderer »

On paper Amazon should be able to acquire Target without any FTC interaction. In the past decade, the FTC has largely turned into a joke as far as what it allows and doesn't allow. Political winds do not seem to matter, the FTC is consistent in basically allowing anything and requiring a few token divestitures out there (could see Amazon agree to divest Amazon Fresh, Amazon Go, and some other assorted odd prototypes that are money losing operations anyway in one of these joke FTC settlements).

Where I think the Amazon and Target merger may run into some challenges is with the perception issue. For many folks in big cities, Amazon and Target are the two retailers they "know" - these folks hate Wal Mart, Wal Mart has few stores in their areas, but if a campaign got going that convinced people a merger between Amazon and Target was a bad thing, the noise may be loud enough from the larger cities for some politicians to actually try to do something about it. By the same token, some people may get a spin on this the other way and say hey, now Amazon has Target stuff too, and see it as a positive enhancement, and look forward to such a merger.

I don't think Kohl's would be a good merger partner for Amazon. Kohl's despite trying to put a good face forward, go walk their stores, this is a chain that is dying on the vine and I don't think their brand holds much value. The feel of Kohl's today in the stores (store condition, merchandising, private label items, employees) is worse than chains like Sears or JC Pennery felt 10 years ago and continues to decline. Macy's has a valuable brand... and some A stores...
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Re: Amazon to open first retail clothing store

Post by arizonaguy »

I highly doubt that Amazon will purchase Target. I do think that the typical customer Amazon is focused on is more likely to shop at Target over Walmart but I do not get the impression Amazon really wants to run a major nationwide brick and mortar retailer. I've always thought that the best merger partner for Target would be Costco in much the same way that Walmart also has Sam's Club. Costco and Target also have a highly overlapping customer base.

I don't understand Amazon's fascination with reinventing the wheel of retailing. If a catalog showroom clothing store was a successful idea someone would've done it before. The fact that it hasn't been done before shows that it's not a great idea.
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