Amazon may now start threatening fashion retailers on the ASX such as Premier Investments Limited (ASX: PMV), Noni B Limited (ASX: NBL) and Specialty Fashion Group Ltd (ASX: SFH).
The huge American online retailer is now selling clothing options. It’s not just selling socks and jocks, it’s a long list of categories including: tops, t-shirts, jeans & pants, dresses, swimwear, coats & jackets, skirts, sports & outdoor gear, lingerie & sleepwear, underwear, socks & stockings.
It will also be selling accessories including belts, handbags, jewellery, sunglasses & eyewear and watches.
How many people will actually buy online from Amazon? It’s hard to say.
But, it’s not like it’s ‘Amazon-brand’ clothes that are being sold – a large number of brands are selling on there including Bonds, Levi’s, Lorna Jane, Rip Curl and Calvin Klein. As well as many smaller Australian brands.
Jus look at what’s happened to the margins of Woolworths Group Ltd (ASX: WOW) and Coles (of Wesfarmers Ltd (ASX: WES)) how a new overseas competitor like Aldi can cause everyone to reduce prices.
Fashion retail is a very competitive market. You only need to walk through your local Westfield owned by Scentre Group (ASX: SCG) to see a whole shopping centre full of clothes stores.
I’m not sure that Specialty Fashion or Premier Investments will be affected that much. Specialty Fashion is doing very well in the US with online sales – which is Amazon’s home advantage.
Premier Investments is delivering excellent international growth with its Smiggle and Peter Alexander brands seemingly on course for $700 million sales between them for FY20.
Whilst I’m less worried about the ASX fashion retailers for now, I don’t think I’d want to invest in Scentre Group or Vicinity Centres Re Ltd (ASX: VCX) at the current prices with how Amazon is now selling more products online that shopping centre tenants sell.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited and Wesfarmers Limited. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.