Zappos Ride Shop section of their online retail store–very popular with youth culture markets
Amazon continues to move into online retail in fashion and footwear as proven now with the big acquisition announcement July 22 that it’s buying up the online retailer, Zappos for about $850 million. It’s Amazon’s biggest buy yet -they bought the bags and shoe shop Endless.com in ’07 and designer online shop Shopbop.com in ’06.
In data from our North American Youth Culture Studies over the course of several years, Zappos has become an important online shopping destination for 13-25-year-olds when it comes to apparel, but especially key footwear brands. In addition, so has Amazon.com -and not just for books anymore. Zappos via Amazon will continue to offer its excellent customer service options including free shipping, return shipping, fast shipping, and up to a year to send back shoes for a refund.
So far Zappos will continue to work under its current management in Las Vegas and keep its warehouse in Kentucky. According to Zappos CEO, Tony Hseih, “We realized that Amazon’s resources, technology, and operational experience had the potential to greatly accelerate our growth.”
We’re curious to see how Zappos and Amazon continue to capture the online retail marketplace, especially among a new generation that’s turning online to shop more so than any other.
PacSun Lowers Expectations
As we’ve stated before, there’s a new form of economic and financial reporting whereby meeting one’s expectations is “good” news even if one loses profits. Beating expectations is now considered “great” no matter how much a company had dropped in revenues. So, it comes as no surprise really, that Pacific Sunwear announced July 22 that it would be lowering their guidance outlook. That way if they do meet this new target, it will be a “good” thing even if it’s lower. See?
In financial-speak, PacSun actually said that they will “take a bigger asset impairment charge” than previously expected. Shares fell 46 cents to $2.94 which is a drop of 13.5% in the second quarter. They expect same-store sales to fall 24% now instead of the estimated 17%.
Generally, PacSun, along with many other brands and retailers in the action sports realm, are taking a beating in this economy while certain fast-fashion retailers are still holding strong.
CIT Tells Fashion Industry to Brace Themselves
As we reported last week about CIT and their $3 billion bail-out, they’re also saying this week that clients need to seek alternatives because bankruptcy is still a strong possibility. Long-term survival of CIT is completely unknown at this point, prompting CIT to tell clients that they need to figure out other solutions, fast.
According to reports from WWD and various blogs from fashion industry players who attended Project in New York last week, it was apparent at the show that what’s going on with CIT has effected a lot of the independent brands in attendance.
Ironically on the West Coast at Agenda, when we brought up CIT and its troubles, many of the streetwear brands said it wouldn’t really affect them much. Either they’re still so small that they’re under the radar and don’t even use a factor institution like CIT, or they’re bigger than CIT clients, such as Converse and Volcom.
Stay tuned for more on the CIT outcome as more news breaks.