While the apparel retailer has fallen on tough times, a new deal to hawk its brands on the e-commerce giant’s platform is resulting in increased foot traffic to its physical stores, Chief Executive Officer Shelley Broader told CNBC this week. Last month Chico’s announced plans to sell its apparel and accessories on Amazon. Chico’s also owns the White House Black Market and Soma brands.
"Customers may have been introduced [to the Chico's brand] through their Prime Membership to Amazon, but they can also return that item [or] seek additional matching items in our boutiques," Broader said during a segment on CNBC’s Power Lunch Tuesday (May 8). "Finding alternative channels to introduce our products to new customers is what 2018 is all about for us." (See more: Amazon Struggles to Sell Apparel, Shoes in Europe.) The retailing group targets fashion-savvy women 30 years and older, according to the company website.
Full-Steam Ahead for Amazon Apparel Push
With Amazon Prime members exceeding 100 million as of April, it’s not surprising that Chico’s would want to do business with the Seattle, Washington-based online retailer. Broader noted that with so many Prime members it made sense to partner with Amazon to get access to new customers. The executive noted that it could expand the number of products and brands it sells on the platform but that it gets to maintain control of marketing, pricing, and promotions. (See more: Why Did Amazon Hike Prime Subscription Fee?)
The move comes as the online retailer is making a big push into apparel. In addition to inking deals with brands, it is creating its own private label lines. Last summer it launched Amazon Prime Wardrobe which lets consumers order shoes, clothing and accessories with no upfront costs. Consumers then have seven days to decide which pieces they will keep. Amazon recently said it will expand the service to more markets. It's only available to Prime members.
Prime Gives Amazon The Edge
The huge growth of Prime, the yearly or monthly subscription service that gives customers two-day free shipping and other perks, has pushed Amazon to the head of the pack in all sorts of segments of retail and is expected to have the same effect on apparel. Morgan Stanley predicted recently Amazon will become the leader in the U.S. apparel market this year. According to Morgan Stanley, Amazon had 1.5% market share last year, largely at the expense of department stores and that is expected to grow in 2018. With millennials' propensity to shop on Amazon, Morgan Stanley thinks Amazon will supplant Walmart (WMT) as the biggest retailer of clothes, shoes and accessories.