Talk might be cheap, but it’s also telling.
When fashion and retail companies meet with Wall Street analysts — and they gather all the time on quarterly update calls, at industry conferences and more — they increasingly find themselves talking about Amazon.
And sometimes they talk, even when they only have rumors to trade.
Don’t expect this to go away. The $107 billion Web giant has been a competitive threat for a long time, but it’s ramping up in fashion and retail. It has a brick-and-mortar bookstore in Seattle and another on the way, it’s launched into private label apparel and is hiring to expand further, and it’s just getting into the home shopping model with a streaming show, Style Code Live.
The tone of the remarks about Amazon ranges from semi-optimistic in the case of mall operators to worry from department stores. The talk also sometimes seems to get ahead of the known facts. Sandeep Mathrani, chief executive officer of General Growth Properties Inc., suggested Amazon was going to open 300 to 400 bookstores and later the company had to clarify that his comments were not intended to reflect the Web giant’s plans.
Here’s what executives tied to the fashion industry have been saying to investors about Amazon over the past month or so.
Mike Koppel, Nordstrom Inc.’s chief financial officer and executive vice president at the March 9 UBS Global Consumer Conference:
“Amazon is a threat. We’ve always said that. We’ve been saying that for four or five years. We’re hyper-sensitive because they live in our backyard. We see, we’re aware of a lot of things going on. Based on our understanding, Amazon has grown their apparel business to $10 billion relatively quickly….That’s a big number. Amazon has created just the standard for distribution, quickness of delivery, mass assortments, etc. etc. So, we are very, very cognizant of what Amazon is doing…. To date, I think Amazon has been fabulous at selling the kind of products that you might describe as basic, whether it was books or DVDs and now everything; light bulbs. And, yes, those are the kind of things that are a little bit more predictable and aren’t as exposed to shelf life. Whereas, if you’re in the fashion industry, time is of the utmost.”
Robert Wallstrom, Vera Bradley Inc. president and ceo, on the company’s March 9 earnings call:
“When we opened up the Amazon relationship, our number-one driver to do that was to really clean up our presence in Amazon. Amazon, obviously, has a lot of consumers going to their Web site all the time. We had a lot of discounting of Vera Bradley products on Amazon. So we’ve really been trying to work with Amazon to really put forward a strong full-price presence. And that’s really kind of the key. We’re not – we want to make sure we grow it right and we grow it in the right brand-appropriate way. Amazon is not a huge business for us, and we’re not expecting it to become a huge business. But we do believe it’s important to control our presence in that distribution point, and that’s really what we’re focusing on.”
Richard Noll, Hanesbrands Inc.’s chairman and ceo, at the Feb. 25 Credit Suisse Investor Luncheon Conference:
“The second strategy in our ‘sell more’ mantra is driving online and has clearly become an important channel in apparel. Over the past year, all of the growth in the U.S. apparel has been driven by the online channel as revenue from traditional brick-and-mortar stores was flat. Roughly 18 percent of apparel was now sold online and the share of Internet pure plays is quickly expanding. We have a three-pronged approach to growing our sales online. We work directly with Internet pure plays, such as Amazon, in a wholesale relationship; two, we support the online efforts of our traditional retail partners, and three, we operate our own Web sites.
“We currently hold leading market shares in our key categories in the online channel. In 2015, our online revenue across all channels grew at a high-teens rate and represents approximately 7 percent of our sales. We expect online growth to accelerate. Therefore, we are aggressively reallocating people and marketing investments to capture this growth to expand our market share lead. As an example, a little over a year ago, we put together a team dedicated to driving business at one of the largest Internet pure plays in the world. At the end of this year, this customer has already become our eighth largest account, growing roughly 70 percent last year.”
Mathrani, on the company’s Feb. 2 earnings call:
“I think it’s 38 percent of e-commerce purchases of the soft goods that are bought online are returned in the bricks-and-mortar store. So to really get a true and proper understanding, until the retailers start to show you exactly what the return rate is and how it’s being impacted, it’s really hard to evaluate in this omni-channel world, why one growth is bigger than the other because you have to take the return rates into account, which really no one does. And just case in point, even Amazon opening bricks-and-mortar book stores, and their goal is to open, as I understand, 300 to 400 book stores. And it should sort of sit back and say that the last mile is all important, which is why Bonobos is opening bricks-and-mortar stores, and Warby Parker is opening bricks-and-mortar stores, and Birchbox is cutting their overhead to open bricks-and-mortar stores.”
On Feb. 3, the company said, “Sandeep Mathrani has indicated that the statement ‘was not intended to represent Amazon’s plans.’”