In a bid to strengthen its retail business,
Amazon ( AMZN Quick Quote AMZN - Free Report) is gearing up to establish a clothing store, Amazon Style, in Glendale near Los Angeles, CA. Notably, the store, which is expected to open in the latter part of this year, will mark the company’s first brick-and-mortar clothing store. It will stock apparel, shoes, and accessories for men and women of several price ranges from a wide variety of popular, luxury and emerging brands. The store will feature high-tech fitting rooms, which will allow customers to scan QR codes of garments on display using Amazon’s app to select their preferred size and color. After the process, the chosen garment will be sent directly to the fitting rooms to try on. In addition to this, Amazon Style will offer real-time recommendations for each customer with the help of machine learning algorithms. With the underlined store, the company strives to offer enhanced fashion shopping experiences to customers with various budgets. Growth Prospects, Deepening Retail Focus
We note that the tech-oriented clothing store under discussion will expand its presence in the fashion retail market of the United States, which, per the data from OBERLO, is expected to generate total sales of $473.4 billion in 2022, suggesting annual growth of 8.3%. Further, the figure for 2023 stands at $494.9 billion.
Moreover, Amazon’s latest move bodes well for its strengthening retail strategies, which include bolstering its online as well as offline retail presence, boosting distribution channels and accelerating delivery. Apart from Amazon Style store plans, the company’s intentions to expand its Whole Foods store network across the United States remains noteworthy. The increasing number of Amazon Fresh grocery stores across the United States is another positive. Currently, the number is more than 20 in the United States. The growing base of Amazon Go, which is a cashier-less store of the company, remains another major positive. Notably, Amazon currently has more than 25 such stores. Further, expanding the Amazon 4-star store, which stocks four-star or beyond-rated products from categories like kitchen appliances and other items, home stuff, toys, books, devices, consumer electronics, and games, remains another positive. The strong footprint of Amazon bookstores is another tailwind. Intensifying Retail Battle
We note that deepening retail focus and expanding the physical presence of Amazon pose serious risks for brick-and-mortar stores as well as big retail chains like
Walmart ( WMT Quick Quote WMT - Free Report) , Target ( TGT Quick Quote TGT - Free Report) and Costco ( COST Quick Quote COST - Free Report) . However, Amazon, which carries a Zacks Rank #4 (Sell), continues to face stiff competition from these retailers due to their robust expertise in the physical retail space as well as strong customer base. This, in turn, might make investors worrisome about the stock. Notably, Amazon has lost 7.8% over a year. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here Although Walmart has lost 3.4% in the past year, it benefits from a strong inventory position, and lower markdowns. Further, with more customers and members returning to stores and clubs, demand seems strong for the company. Also, Walmart’s wide variety of stores, including discount stores, supercenters, Sam’s Clubs and Neighborhood Markets, are aiding the company in sustaining its momentum in the retail market. Target, which has risen 15.5% in a year, is gaining from the growing technology investment and modernizing the supply chain. Further, its increasing number of general merchandise stores, which provide an edited food assortment, including perishables, dry grocery, dairy and frozen items, remains positive. The expanding base of its small-format stores, which offer curated general merchandise and food assortments, is another tailwind. Costco, which has gained 33.3% over a year, is benefiting from its growth strategies, better price management, and strategy to sell products at discounted prices that have helped attract customers seeking both value and convenience.