In the Amazon versus Walmart Inc. battle for consumer domination, both sides have learned they can’t rule the world with sweatpants and T-shirts.
The mass giants are moving up the fashion ladder and in their own ways, building infrastructure and making connections that could help them move higher.
Amazon has been quietly courting the top European luxury brands and retailers, testing to see who’s willing to collaborate and offering its vast store of data to target customers online. An Amazon spokeswoman said, “While I can’t comment on rumor or speculation, what I can tell you is that we sell an incredible breadth of product — from small, burgeoning designers to well-known brands — and are constantly expanding our selection for our tens of millions of Amazon Fashion customers.”
Walmart, meanwhile, has been revamping its private brand offering and picked up some more fashion expertise. The company confirmed it is working on a consulting basis with Stefani Greenfield, who cofounded Scoop NYC, the now-defunct but in its time ubertrendy fashion retailer. Walmart also owns the Scoop NYC trademark, although it’s not clear how it is going to be used or if it is perhaps lying dormant and a relic of the company’s 2016 acquisition of Jet.com.
Amazon’s European luxury networking and Walmart’s connection to Greenfield and Scoop, which have not previously been revealed, come amid broader growth initiatives that make clear both companies see the higher-end of the market as open territory in their tit-for-tat battle for bricks and clicks.
Online, at least, Amazon has the advantage for now, but Walmart is coming on strong, buying Jet, Bonobos, ModCloth and Moosejaw and linking with Lord & Taylor.
The two consumer giants face similar problems as they venture up into higher-end fashions.
Both are seen as master operators with deep experience in logistics and all the things one needs to be not just big, but huge. But they both have reputations as tough competitors looking to build their own share while squeezing suppliers and taking over new businesses once they learn them from partners.
Executives at designer businesses also worry their high-end brands could loose their luster with such mass distribution since, face it, neither Amazon nor Walmart has an elevated image.
But the rules are changing and much about online remains unsettled. The web is more about the kind of convenience that the giants can offer and does not rely as much on well-appointed bricks and mortar, although players such as Net-a-porter and Farfetch have succeeded in creating online presences with a more sophisticated feel.
Jeff Bezos’ Amazon has been dogged in courting the luxe set, for example, when its flurry of fashion week sponsorships and a turn at the Met Ball didn’t lead to a rush of designer deals.
The big brands remain wary of the digital giant, but sources familiar with Amazon in Europe said the company has been hotly pursuing a luxury strategy, shifting from one approach to another looking for an opening.
Several sources said the company has courted top executives at the leading luxury brands, floating an idea about a concession model that would give them direct access and the ability to target the millions of shoppers who use Amazon. (Research has shown that half of all product searches online start on Amazon, at least in the U.S.).
Market sources said Amazon has been circling around and reaching out to luxury brands in Italy and elsewhere, but that it has been met with resistance. “There is some hesitation and wariness concerning positioning and pricing,” said one source.
When the brands proved reticent, sources said Amazon moved on to multibranded European retailers and has found some success there.
Amazon is said to have suggested that multibrand retailers can set up an online shop to sell designer and luxury goods. One source said shop names would be generic, so the retailers don’t have to worry about harming their relationships with the brands.
However, that approach could have its risks since one source close to a luxury brand noted that they would cut off any of their retail partners that sold to Amazon, adding that brands already have to battle with department stores to make sure they don’t undercut them with their online offer.
The web giant is said to have set up offices in Germany and to have hired fashion buyers — but no big names — who can deal with orders. It is looking to get about 10 European multibrand stores on board before it launches a test phase, and it is gearing up to do that soon.
This is seen as an effort by Amazon to convince designer brands that its platform can be used to sell high-end looks at both scale and full price.
But industry observers in Europe are skeptical that Amazon could truly play at higher fashion price points without creating a separate, stand-alone platform to create the right, and rarified, environment for the brands.
“I really think this depends on the environment they will be able to create — if they can have the key luxury brands grouped together and create a luxury feeling as the other luxury e-tailers such as Matchesfashion, Net-a-porter or Mytheresa are creating — why not?… But I guess this will still take some time,” said one source.
Amazon’s not the only tech giant with a growing interest in fashion. Alibaba has sought to cozy up to the industry and is becoming more active in New York Fashion Week and taking steps to better police its marketplace for counterfeits. And that company’s chief competitor in its home market of China, JD.com, last year invested $397 million in Farfetch to gain access to brands on the luxury platform — an approach that appears to be very similar to what Amazon is trying to pull together.
These are the new global competitors for the consumer. And while Walmart has stores around the world, the retailer is playing a new online game and the brick-and-mortar leader is still positioning itself.
At the Shoptalk tech conference, Marc Lore, the Jet founder who’s now president and ceo of Walmart’s U.S. e-commerce division, said the company had a two-part mergers and acquisitions strategy.
“The first is buying specialty retailers that could help us get the fundamentals right on both Walmart and Jet,” Lore said.
The other is to pick up brands that have a deep well of content and vendor relationships and merchandising expertise in what he called “long-tail categories.”
“We’re looking at and talking to more companies now than we ever had,” Lore said. “So we’re definitely in acquisition mode.”
Just where that hunt for deals takes Walmart is an open question. But to compete online with Amazon and the other digital giants, Walmart might have to keep building out the fashion business by moving up the price scale.