Amazon Wins Big in Morgan Stanley's 2017 Apparel Survey

Amazon is becoming the go-to place for Americans to buy clothing. 

For a third consecutive year, a survey by Alphawise, a research arm of Morgan Stanley, explores the state of the apparel industry in America. The 2017 research found that 69% of people said they bought clothing from Amazon over the last six month, a 10% increase from a year ago. The survey included a poll of 2,000 "nationally representative US teens and adults."

There are four main takeaways from the survey. 

First, Morgan Stanley's Alphawise results show that out of 28 top retailers, Amazon has the highest and fastest growing rate of customer loyalty. With a "staggering" 61 net promoter score (NPS®) Amazon is increasing taking share in the apparel space, hurting department stores and specialty retailers. In second place is Target, with a net promoter score of 28, and nearly nine times the average score of other retailers.

Jeff Bezos' largest Internet-based retailer has recently been enhancing its fashion efforts, developing a slew of private brands. Amazon's latest fashion efforts have been focused on its sportswear brand, which will reportedly be made by the same company that manufactures apparel for performance brands like Lululemon and Nike. The company is also experimenting with various sales and delivery models, including a new apparel subscription service (currently in beta), called Prime Wardrobe.

Second, Amazon, Zara, and Wal-Mart were champions in terms of consumers intent to purchase over the next 12 months, although off-price retailers including TJX Cos. and Ross Stores were at the top of the list. Not only is Amazon acquiring more customers, but its customers are also spending more with the brand. In Morgan Stanley's survey, 42% of respondents said that they spent more on Amazon in the past year on clothing than they did the year prior. 

"Amazon is quickly gaining traction at the expense of department stores and select specialty retailers," the Morgan Stanley analysts wrote. Its "share gains could accelerate from here."

Third, according to the survey, people think TJX Companies, the parent company of TJ Maxx and Marshalls, has better prices than Amazon. TJX is one of the few retailers to see recent positive store traffic. Morgan Stanley's Alphawise survey reveals that nearly 60% of respondents associated TJ Maxx and Marshalls with having the lowest and best prices on clothing, while 46% respondents recognized Amazon for the same. However, low prices for clothing doesn't mean those retailers had the most overlap in customers: On average, 79% of department store shoppers also purchased apparel on Amazon over the past six months. 

Finally, according to a Cowen & Co. note to investors from earlier this year, Amazon is expected to pass Macy's as the US' largest apparel seller this year. Its clothing and accessory sales are expected to grow nearly 30% next year, to $28 billion. Currently, Amazon claims only 6.6% of the apparel market, but that is expected to increase to 16.2% in the next five years. 

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