Amazon Fashion Becomes Its Own Force as Walmart Reconsiders Brand Acquisitions

Sometimes it is a selective and focused sales strategy instead of broad appeal that may see overwhelming results.

Amazon’s current standing as a player in higher-end fashion sales has been years in the making. In 2016, the company deliberately pivoted past the concept of simply being a third-party clothing and accessories seller with its surprise fashion line launch of seven trademarked brands.

Adding its own private-label Essentials line to its in-house brand portfolio, Amazon still did not begin to gain a significant market share until 2019. Until then, Walmart had a sizable lead in clothing and apparel sales, evidenced in past PYMNTS research.

From high-end fashion to riding high

In that year, the company seemed to specifically invest effort and spending into higher-end labels, hiring Sally Singer as Amazon’s head of fashion direction after a nearly two-decade tenure at Vogue. Amazon also partnered with social media influencers with its The Drop storefront in 2019, featuring a series of guest-curated content by heavy hitters such as Kendall and Kylie Jenner. Only then did the company begin pulling ahead of Walmart in sales within the segment, as illustrated in PYMNTS’ proprietary research.

This consumer spend share grew by more than two percentage points from Q4 2019 to Q1 2020 after the company launched the abovementioned initiatives. It has continued pulling from Walmart since.

Given the scale of each of these retail giants, this lead becomes more dramatic when discussed in terms of actual sales numbers.

In 2020, when Amazon’s sales started leading Walmart by several billion, Amazon expanded its focus on higher-end clothing and accessories labels. The company launched Luxury Stores, a collection of platform-hosted brand stores featuring Oscar de la Renta as its most famous name. This partnership led the designer to snub Fashion Week in favor of streaming its shows on the eCommerce platform, citing greater and more direct customer acquisition through these channels.

In recent years, Amazon has focused on expanding its stable of higher-end designers offered through Luxury Stores to include brands such as La Perla, Gucci, Fendi and Dior. The retailer is also cashing in on the current resale craze without straying from its luxury focus through hosting Rent the Runway’s digital storefront. Amazon partnered with Victoria’s Secret on its Fashion platform in June as the lingerie brand seeks to rediscover its former popularity.

Walmart: A broader fashion strategy

Although Amazon clearly enjoys a comfortable lead over Walmart in clothing and accessories sales and market share these days, Walmart’s sales numbers are still significant. The Arkansas-based megaretailer made $9.5 billion in clothing and apparel in Q1 2023 alone, representing 7.1% of total U.S. consumer retail spend for the segment.

Nevertheless, seeking to shrink Amazon’s lead, Walmart has created innovations to lure its target customer base, who focus more on bargains than name brands. These include Walmart’s virtual dressing room in 2022, powered by computer vision and artificial intelligence. The retailer enhanced and updated the feature a few months later, allowing users to “try on” using their own images.

However, when it comes to brand partnerships and acquisitions, Walmart seems to have had more of a bumpy ride than Amazon. Some have succeeded, such as the retailer’s 2021 addition of tween brand Justice to its roster. However, per Reuters, Walmart sold ownership of menswear retailer Bonobos in April at a $30 million loss and plus-size brand Eloquii a week before for an undisclosed sum to boost margins.

Despite these relatively recent sales, there have been some acquisitions. Destination Maternity recently inked an exclusive distribution agreement with Walmart for the brand’s 2023 spring/summer collection. Per Women’s Wear Daily, it is also selling an organic baby clothing line in similar exclusivity deals.

Long-term strategy benefits

A driver for Amazon’s success may lie in its early efforts at refining its fashion offerings. For eCommerce fashion spend, a focused, long-term vision a as destination for a specific customer base has proven to be more beneficial, at least for Amazon, when securing a long-term profitability path.