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Amazon's Sportswear Disruption Another Uh-Oh for Apparel

By Published on .

Nothing like another player in the already-crowded athleisure market to add an extra dose of rivalry. But that's what you get when the new entrant is Amazon.

After making inroads on its own in-house fashion line, the Seattle-based ecommerce giant is now moving into sportswear, Bloomberg News reported, and is said to be tapping Taiwanese suppliers to manufacture its own private-label sportswear brand.

Now, retail analysts are weighing in, and they're painting a drab picture for competitors.

This would be "a clear negative for the mass market area of the category," wrote John Kernan, retail analyst at Cowen and Co., in a research note on Monday. "It will create additional supply and deflation in a category that already has inventory piled high in the U.S. wholesale channel." He added that mass market brands are especially at risk. Dick's Sporting Goods, he noted, is making a larger push with its own in-house athletics label Second Skin. And Gap has its own sportswear products as well.

Already, sportswear brands like Under Armour are seeing sales soften as the performance apparel bubble begins to burst. Matt Powell, sportswear analyst at NPD Group, said that innovative product will be a primary motivator in purchase, but Amazon undercutting similar competitors—especially those whose sourcing lines are the same—could inspire buys as well.

Despite optimistic predictions on holiday retail sales from the National Retail Federation, which expects sales to increase between 3.6 percent and 4 percent this year over 2016, warm weather is already taking a toll. Total U.S. retail traffic declined 5.9 percent year-over-year for the second week of October, according to Cowen's Kernan. In 2015, an unseasonably warm winter robbed retailers of $572 million in November and December sales as shoppers shunned cold-weather goods.

After Amazon finishes disrupting the sportswear market, signs point to its overhaul of the baby and intimates sector—its new Taiwanese suppliers also work with Hanes and Gap.

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