Amazon's fashion brands are growing rapidly — but it'll take awhile to catch Macy's

Amazon's private label fashion brands are only a fraction the size of those sold at Nordstrom and Macy's. Yet even though they're growing rapidly, it'll take time for them to catch up.

According to new data from Slice Intelligence, Nordstrom's dressy-casual Halogen line generated 11 times the digital revenue of Amazon's best-selling private brand, Lark & Ro, from January 2016 through February 2017.

Macy's Alfani label rang up online sales that were nearly 10 times greater over that same time frame, Slice said.

Sales of Amazon's private fashion designs grew an impressive 26 percent in the fourth quarter compared with the prior year. That was roughly in line with the rate of expansion among Nordstrom's brands. Macy's private label brands grew 18 percent over a comparable period.

Slice pulled its data by scanning the online shopping receipts of more than 68,000 U.S. consumers.

"Amazon's new private label brands will need time to develop that familiarity," Ken Cassar, principal analyst at Slice Intelligence, said in a statement. "Still, competitive apparel brands...should keep a close eye on Amazon."

Indeed, while Lark & Ro is only about a year old, Alfani has been around for more than three decades. Many traditional retailers use private label brands as a way to sell products that can't be found elsewhere. That makes them less prone to price competition. And because the items are designed by an in-house team, they also produce higher margins.

Private label brands accounted for roughly 20 percent of Macy's revenue last year, according to its latest annual filing with the Securities and Exchange Commission.

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Amazon has remained relatively tight-lipped about its private label offerings, even as it's pushed deeper into apparel. That includes the eight brands available in the U.S.

One advantage Amazon may have is that it can gather valuable insight into consumer preference by watching their search patterns. Also, it can highlight its own brands when a customer enters a search query.

Slice's data found that one of Amazon's biggest opportunities in branded fashion appears to be in dresses. More than 40 percent of all private-label apparel sales on its site pertained to that item, Slice found.

A separate report by the research firm L2 echoed Slice's finding. Its analysts concluded that Amazon's cocktail dresses, women's sweaters, and men's shoes pose the biggest threats to legacy brands.

Though Amazon's dive into private-label fashion is still nascent, Cowen & Company predicts Amazon's overall apparel sales will surpass those of Macy's this year, ringing up more than $28 billion.

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