Walmart and Amazon emerge as fashion’s duopoly

Although Walmart has long beat Amazon in overall U.S. apparel and accessories revenue, the mass retailer’s lack of an online fashion presence has made it less of a competitor in that space.

But that’s bound to change with Walmart subsidiary Jet.com’s recent acquisition of the womenswear retailer Modcloth, the company’s largest push yet to connect with a younger, more fashion-savvy clientele. The move helps round out Jet.com’s similarly minded purchases earlier this year of the outdoor retailer Moosejaw and the online footwear shop Shoebuy.

The personalization playbook
“This move from Walmart is to not only amp up its e-commerce strategy and compete against Amazon, but also to strengthen its personalization strategy by continuing to acquire highly curated brands, which will expand its reach to new audiences,” said Tushar Patel, the CMO of the commerce software company, Kibo.

That personalization is crucial today, as consumers come to expect it more and more. A recent Salesforce report titled “State of the Connected Consumer” found that 61 percent of millennial consumers and 52 percent of Gen-Xers would be willing to share personal data in exchange for personalized experiences in-store and online.

Imagery from a recent Modcloth lookbook

By syncing up with unique companies like Modcloth and Moosejaw, Walmart is now better poised to offer that personalization and cater to a wider swath of young consumers.

“This is new territory for Walmart, which previously built a reputation with consumers of being the ultimate megastore where they could find commodity items at the lowest prices, but not necessarily a place where they could find a unique and highly curated shopping experience,” said Patel.

And as Jenn Markey, the VP of Marketing at 360pi, points out, Walmart’s position as the “store for everything” has lost its charm amidst “the endless online shelf.”

Struggling for fashion
That “endless online shelf” could be equated to Amazon itself, which got a head start on the fashion front when it acquired the popular e-commerce platform Shopbop in 2006 and the online footwear retailer Zappos in 2009. In 2012, the company solidified its interest in the industry when it launched the Amazon Fashion arm, dedicated to upping the ante on its product assortment and imagery, as well as developing relationships with the likes of the CFDA.

That transition hasn’t been without its road bumps. “It is an extremely difficult and unforgiving line between being a price leader and being a fashion authority,” said Markey. “Much of it comes down to the shopping experience and perceptions of getting a great deal.”

Indeed, Amazon has struggled to court a lot of prestige designers willing to associate with the other mass market brands it sells. To counteract this, they’ve streamlined the Amazon Fashion landing page and styled lookbooks in the vein of its sister site Shopbop. Though Calvin Klein and BCBG Max Azria are sold through the site, the rest of its offerings fall into the lower-priced contemporary market, with brands like French Connection and MinkPink.

Compare this to Walmart’s assortment — which includes Hanes, Jordache and a slew of brands industry figures have likely never heard of — and it seems positively luxurious.

Good deals trump all
However, that attitude — toward both Amazon and Walmart — is short-sighted and one that many experts believe fashion should be weary of.

As Markey mentioned, consumers want a good deal just as much, if not more, than a pleasant shopping experience. The latest Consumer Trends Report from Kibo backs this up: 70 percent of consumers said price is the most important factor when making purchases online, with brand being the second most important factor, influencing 12 percent of consumers — and retailer being the third most important factor, at 6 percent.

“This goes to show that even fashion consumers will choose pricing over a [prestige] retailer brand, if they can obtain their desired product at the time required,” said Patel.

Amazon Fashion’s landing page

Amazon and Jet.com already thrive off of their endless stream of deals (and speedy shipping), a fact which is likely to outweigh any weaknesses — like a less appealing brand experience — in the long run. And both companies are already working to mitigate those weaknesses, as their acquisitions and vertical build-outs indicate.

The two sites “[will be able to] provide personalized experiences at the best possible prices or in conjunction with fast fulfillment options” much sooner than beloved fashion e-commerce platforms like Net-a-Porter or Matches will be able to speed up their shipping or lower their pricing, said Patel.

And as Chris Paradysz, the founder and CEO of PMX Agency, pointed out, companies as large and nimble as Amazon probably would have tackled said weaknesses already, if they felt they were a threat to their success. “I would not underestimate their priorities and understanding of consumer behavioral shifts,” he said. “Overhauling their user experience would be significant, but you can be sure they’re constantly testing the impact this would have on the shopping behaviors they’ve carefully created.”

What’s more, though Amazon and Jet.com may not offer personalization in the vein of a site with an overall aesthetic or viewpoint that syncs up with consumers’, they do use advanced personalization algorithms that ensure the products each person sees are those that would appeal to them most.

“When you pair that with a larger selection than any other online retailer, alongside their strengths in shipping and price, they’ll continue to be unbeatable,” said Adrien Nussenbaum, the CEO of marketplace solutions firm Mirakl.

It’s still unclear whether or not Amazon and Walmart/Jet.com will be able to court the high-fashion and trendier brands they currently lack, however. Two communications directors — one at a luxury fashion house, the other at an up-and-coming contemporary brand — would only speak anonymously on the matter, but they both denied it as a possibility. “It would totally deplete our luxury reputation,” said one. Others were simply unwilling to comment, and companies like LVMH (which owns Celine and Dior, among others) have been vocal about not wanting to sell on the platform.

But Patel believes that those coveted brands would be smart to strategize how they can leverage the two behemoths, calling their eventual partnerships inevitable. “The market is competitive, and it’s only a matter of time before fashion brands become readily available through these channels,” he said.

The move to differentiate
For Jet.com to have as much fighting weight as Amazon, however, experts say they should allow their acquired brands to continue operating independently, a la Shopbop, which is the plan for now.

“How these acquired companies compete with other brands is what to watch for, [and] I stand by my experience that consumers want choice and diversity,” said Paradysz. “If you follow the money – venture capital, private equity and hedge funds – the bet continues to be on brand differentiation, not consolidation.”

Shopbop’s landing page

“I expect [brands like Modcloth] to continue to serve their target customer well, and uniquely — that’s their strength and the point of those acquisitions,” said Nussenbaum. “It’s easy to think Jet.com doesn’t have a well-defined strategy because the brands are so different: Modcloth and Moosejaw have almost no overlap in their customer base, but that’s the point!” he added. “[They’re going to] continue to radically diversify their product offerings to attract more customers.”

As a result, Walmart may end up being the only clothing retailer able to compete with Amazon, which is expected to triple its share of the U.S. apparel market in the next three years, according to Bloomberg. And if department stores continue to struggle as they have, fashion’s more elite brands could have no other choice but to hop on board these wide-reaching sites to make up for net losses.

“Price, service and ease of use is difficult to beat,” said Paradysz — and fashion may have to give up some of it’s glamour to achieve that.