Today, I came across an article in The New York Times that really made me sit up. Its about apparel, but it contains some very important information for the toy industry. The article by Nick Wingfield, "Amid Brick-and-Mortar Travails, a Tipping Point for Amazon in Apparel" contains this startling statistic:
If there are tipping points in retail — moments when shopping behavior swings decisively in one direction — there’s a strong case to be made that apparel is reaching one now, with broad implications for jobs, malls and shopping districts…Those moments often occur around the time that online shopping reaches about 20 percent of total national retail spending in a category…Online clothing and accessory shopping’s share of retail hit 21 percent last year…
E-commerce toy sales now constitute 25% of all toys sold. The toy industry is well past the tipping point that apparel has just reached. That means that there are bigger challenges ahead for bricks and mortar retailers that are in the business of selling toys and games.
Its interesting to compare Amazon's position in the toy industry vs. apparel. Amazon represents 8% of that 25% of e-commerce toy sales. Similarly, according to the article, Amazon represents 6.6% of the 21 percent of e-commerce apparel sales. What caught my attention, however, is that Amazon is forecasting that in five years its sales will represent 16% of all apparel sales. Is that 8% growth going to come out of rival e-commerce providers or from bricks and mortar?
Smart retailers are going to need to start planning now how to avoid Macy's fate in apparel. The retailer just closed 100 stores and were supplanted by Amazon as the number one seller of apparel. And Amazon has not even really gotten started yet.
If Amazon is projecting that kind of growth in apparel, why not in toys? And if they do decide to go after toys, out of whose hide is it going to come?