Affairs

Modern Luxury CEOs Respond to Amazon’s Activewear Moves with a Collective “Meh.”

Amazon is starting to churn out in-house direct-to-consumer (DTC) brands like there’s no tomorrow. Since putting its weight behind its Amazon Fashion efforts in recent years, it’s tackled the women’s market with Lark & Ro, the children’s market with Scout + Ro, and most recently, the men’s shirting market with Buttoned Down. Each entry has felt vaguely modern luxury, but unlike the real mccoy, they lack a certain sense of soul. Still, that hasn’t stopped Amazon from reaping the rewards (at $16.3 billion in apparel sales in 2015, it became the largest online retailer in the US) and the publicity, and after making a few entrepreneurial hearts skip a beat in the markets above, the e-commerce behemoth now sets its sights on its next target: the activewear category.

That’s according to some very clever reporting from Recode’s Jason Del Rey, whose report this week set off an avalanche of subsequent articles in response. Few, aside from an excellent follow up by Racked menswear reporter Cam Wolf offered much insight on how Amazon’s entry might impact the market, whether or not certain DTC operators should be worried.

Still, we had questions of our own. Specifically, what might this mean for modern luxury companies (MLCs) and their founders? This is especially relevant given that activewear and technical performance occupy the center of the modern luxury market (many MLCs are activewear brands), and that most companies in the space mostly sell online. We were curious to find out their reaction to the news upon hearing it. Did it leave them anxious at the thought of a possible Amazon blitzkrieg? Does Amazon even have a real chance here, and does the threat of a successful activewear brand bring on a cold sweat among founders?

“The real moat to any of Amazon’s efforts…is that our brands come from our souls, from our bones. Their brands come from whatever the exact opposite of that is.”

We took a sampling of the mood and asked several activewear brand owners and executives for their view on things. Shooting a few quick questions by email, Ten Thousand CEO Keith Nowak (men’s technical gymwear), OLIVERS brand director Dylan Nord (men’s urban commuter), Girlfriend Collective co-founder Quang Dinh (women’s activewear), and Outlier CEO Abe Burmeister (men’s technical performance) were the ones to respond by deadline.

Are they concerned about Amazon’s activewear push?

Chalk it up to either pure delusion or just supreme confidence, but the general response would be summed up as a collective shrug.

Abe Burmeister’s response encapsulated the mood rather well. “[H]onestly, [I] have a hard time seeing this as news,” he remarked, adding later: “Obviously they are a beast so we need to watch what they do, but for now it’s hard to see much difference than with competing with any other mass market player.”

“I’m more interested than worried,” offered Dylan Nord. “I’ll be looking to see if Amazon can or attempts to deliver on the quality and invest in the community like Lulu has done or create a unique look and feel in a crowded space like Outdoor Voices. Or if they stick to the well made staples at a reasonable price.”

Quang Dinh shared Mr. Nord’s sentiment. “Honestly, we aren’t worried at all,” he said, citing that Girlfriend Collective’s position as a specialist brand protected it from Amazon’s more price-conscious approach. “While Amazon places value on price and options, we place value on design, sustainability, and a connection to our customers,” he said. In other words, a brand like Girlfriend Collective that shows that it cares truly and deeply about the products it sells (and the customers that it sells these items to), ensures that it has more of a soul than a brand that might simply be interested in getting as many items in as many customers’ hands as possible.

Ten Thousand’s Keith Nowak, who on his day can rival Mr. Burmeister for razor sharp straight talk, was more pointed. “They’re a little late to the game, no?” he opined. “Athleisure is dead, and athleisure for men was dead on arrival. Not worried.” His biggest critique focused on the turn-key, commodified approach Amazon might be taking, and questioned whether smart shoppers would be convinced to buy when specialist brands offered something more meaningful. “These types of ‘brands in a box’ are never authentic,” he argued. “Totally hollow. In our space in particular, belief in product quality and performance is key in the buying decision. As a customer it’s hard to believe that story coming from Amazon.”

Are they well-positioned to face this sort of challenge?

MLC founders, based on this small sample size, may indeed be relatively unconcerned about the potential for Amazon to encroach on their turf. But that’s not to say they should not be worried about Amazon getting it right — and whether or not their brands are positioned well enough to tackle that challenge head on. “Powerful nations, even during times of peace,” once wrote JFK, “should always be prepared to go to war.” Perhaps a bit dramatic for our purposes, but the the same idea applies to MLCs today.

Mr. Nord believes that Amazon could in fact have a larger impact than what he and his peers currently believe, and that some premium brands might be exposed. “Amazon has a good shot at the activewear market because premium brands haven’t done a good enough job justifying their higher price points,” he observed. “That’s created a group of consumers that can’t think why yoga pants should cost $100, and so, are ready to believe they can get the same quality and look for less.” But, he added, for him and customers like him with a good sense of the offerings of the market, “Amazon would have to do some pretty impressive brand building to end up on my shopping list. . . . To me, Amazon represents convenience. I think fashion can be a bit more thoughtful than ‘sort-by’ and ‘1-click ordering.’”

He said OLIVERS is “constantly pushing [itself] to create the best-in-class products with technical materials and simple design, all made in California,” and is therefore well positioned for anything Amazon might bring its way. But in order to remain so, they “need to continue to do a better job at communicating [those benefits] and building a community.” “If we can’t,” he said, “OLIVERS and everyone else in the space stand to lose ground to the generic version.”

Mr. Dinh remains cautiously optimistic as well, arguing that consumers are much less likely today to seek out generalist products, and tend to flock towards “thoughtful consumption and quality.” He believes that Girlfriend Collective is well guarded due to selling DTC, and offering reasonable prices on a better quality activewear product. This sweet spot, he said, appeals to “both the people who want a good deal and the people whose loyalties lie with small, independent labels.”

Mr. Burmeister, echoing, Messrs. Nord and Dinh, said that Outlier’s immunity was its rejection of commodification. “Our approach is just keep trying to make quality product that’s hard to commodify,” he sai. “[The] main thing I watch for in Amazon is indicators they intend to and can break out of the commodity zone. [That’s] happening a bit with Alexa but that took quite some time and it’s still an early stage category.”

Mr. Nowak perhaps offered the strongest insight here. “Amazon is calling our bluff on this now by seeing if they can do the brand thing too,” he said. But, he argued, it’s not just about scale and ubiquity. The modern luxury market doesn’t support that approach on the top end very well, which is where a brand like Ten Thousand resides. “We [MLC founders] all believe that we can do something better because we’re small, closer to our customers, and able to be something other than generic and down the middle,” he said. Continuing on, he later added that MLC founders “act out of compulsion, not because of a market opportunity,” and that “there are tactical things we’re doing [at Ten Thousand], and others can do, to be different from Amazon’s private labels (i.e. the fit and feature options we offer so you can personalize your training gear).”

It remains to be seen what Amazon’s true activewear play will be. But suffice it to say, the temperature among modern luxury activewear founders at the idea of it remains cool. Mr. Nowak’s closing thoughts speak for most: “The real moat to any of [Amazon’s] efforts to build brands, is that our [MLC] brands come from our souls, from our bones. Their brands come from whatever the exact opposite of that is.”

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