Amazon’s Launch of Luxury Fashion Shops is Latest Blow to Struggling Department Stores

Updated: Sep 16

By CNBC


This article was originally posted on CNBC September 15, 2020. We are sharing because it addresses a significant move in retail that could have repercussions down the supply chain. It also notes e-commerce tools, like 360-degree viewing, that make these kinds of industry changes possible.


Amazon’s foray into luxury fashion is the latest blow this year to U.S. department stores, which have been hit especially hard by the coronavirus pandemic.


The e-commerce company announced Tuesday the launch of a section on its mobile app called Luxury Stores, kicking off with items from designer Oscar de la Renta’s pre-fall and fall-winter 2020 collections. It said additional luxe fashion brands will be added to the app in the coming weeks.


Only Amazon Prime members will initially be able to shop this section by invitation, according to Amazon. But invitations will be extended to more customers over time, it said. Amazon’s Luxury Stores will include interactive features like 360-degree viewing, which allows shoppers to see items on different body types and various skin tones.


High-end department stores that sell designer-name bands like Oscar de la Renta have increasingly fallen out of fashion with shoppers. This year alone has brought bankruptcy filings from Neiman Marcus and Lord & Taylor. The latter, which is the oldest department store chain in the nation, is liquidating. Neiman Marcus is still in the process of emerging from bankruptcy but is also shuttering stores, including its recently opened flagship at the Hudson Yards mall in Manhattan. Barneys New York went bankrupt last year. Saks Fifth Avenue shuttered its men’s department store downtown in New York City.


Fashion brands that have long relied on these stores to offer them channels of distribution to get in front of customers are suddenly much more reliant on their own shops and websites — or are searching for other partners, like Amazon.


Macy’s CEO Jeff Gennette recently spoke about the opportunity he saw in the luxury apparel space, with a number of high-end department store chains going under and leaving market share up for grabs.


“Bloomingdale’s is having a moment,” he said about Macy’s higher-end department store banner. “We have brands in our arsenal that we didn’t have before that are looking for additional distribution.”


Amazon said Oscar de la Renta’s team will be able to independently make decisions about its assortment, pricing, delivery options and customer service.


In the past year, Amazon said its customers have ordered over 1 billion fashion items via its mobile app. Amazon has said it has more than 150 million paying Prime members.


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