With fresh reports arriving that Amazon was moving forward with its pursuit to develop its own activewear line, Laurent Potdevin, Lululemon’s CEO, told CNBC that any line from the e-commerce company would unlikely compete directly with the yoga-themed retailer.
“I think Amazon is mostly around commodity product. That’s not our sandbox,” Potdevin said. He explained that Lululemon’s differential would be its focus on innovation and on the upper-end of the marketplace. Potdevin also added, “The fact that we control our distribution really allows us to have a different positioning,”
The move was first reported by Bloomberg late Friday. The report indicated that Amazon has been testing small-batch trials of apparel items with two well-known Taiwanese sportswear manufacturers – Eclat Textile Company and Makalot Industrial Co. Eclat Textile Company manufactures product for Lululemon, Nike and Under Armour while Makahlot Industrial has sourced for Gap, Kohl’s and Uniqlo. No long-term contracts have been signed.
Some Wall Street analysts seemed to agree that Amazon’s likely entry will put more pressure on mass-market retailers rather than the industry’s premier brands, also including the big three: Nike, Under Armour and Adidas.
“Brand loyalty is some of the highest in apparel, and endorsements remain a key component of marketing,” wrote analyst Edward Yruma, at KeyBanc. ”While we are reticent to ever underestimate Amazon, this is one category that we think it may have difficulty truly disrupting.”
In a note entitled, “Amazonian Apparel Is A Clear Negative For Mass Market Brands,” Cowen analyst John Kernan described Amazon’s potential entry into activewear as “a clear negative for the mass market area of the category.”
He cited Dick’s Sporting Goods and department stores among the mass market retailers that could be impacted.
Indications that Amazon may be working on an activewear first arrived in January when Re/Code noted that Amazon posted three job listings in late December for brand managers and senior brand managers working on “Amazon Active Apparel.”
In January, Kirsten K. Harris was hired by Amazon as senior brand manager – commercialization, private brands – Amazon Active Apparel. She was formerly product development manager – women’s active, Nordstrom Product Group, and helped develop its activewear brand Zella.
Prior to joining Nordstrom in July 2014, she was Sr. level global sourcing manager – outerwear, performance apparel and gear (OAG) at Eddie Bauer for a year. From 2011 to 2013, she was a Sr. product developer/manager for Nike, responsible for managing all overseas factories in Asia for its NFL program, according to her LinkedIn profile.
Amazon has invested heavily in private labels over the last few years but the initial focus has been on fashion. It now has 19 private-label apparel brands. Many of them are still in their embryonic stages, including dressier women’s lines such as Society New York, Lark & Ro and James & Erin; intimates lines Arabella and Mae; men’s lines Franklin Tailored and Goodthreads; and Scout & Ro children’s apparel.
Overall, Amazon has 34 in-house brands. Morgan Stanley analysts projected earlier last week that Amazon’s private-label brands could add $1 billion to its gross profit in 2019.
Photo courtesy Lululemon
