Online apparel sales accounted for 27.4% of overall U.S. apparel sales in 2017, according to Internet Retailer estimates. Established, store-based retailers are responding by improving their online game.

Online apparel is a crowded marketplace. Of the retailers in the Internet Retailer 2018 Top 1000, 266 are dedicated apparel retailers—more than any other product category. And that does not include mass-merchant giants like Amazon.com Inc. (No. 1 in the Top 1000) and Walmart Inc. (No. 3).

Online apparel sales accounted for 27.4% of overall U.S. apparel sales in 2017, according to Internet Retailer estimates. That’s up from 23.5% in 2016 and 20.7% in 2015.

Not only do consumers buy more clothing online than ever before, most say they like buying clothing online. According to a February 2018 survey of 2,535 U.S. consumers by PYMNTS.com, 43.2% of respondents said they prefer to shop and buy in stores, while 26.9% prefer to shop and buy only online and 29.9% said they prefer online and in-store.

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Established, store-based retailers are responding by improving their online and omnichannel game.

For example, children’s apparel retail chain Children’s Place (No. 113) is in the process of implementing a $50 million “digital transformation” that involves 100 initiatives planned over the next 24 months. So far, that includes rollouts of in-store Wi-Fi, in-store pickup of online orders and ship from store at U.S. stores. In addition, the company now offers free shipping with no minimum purchase and is using mobile point-of-sale technology, which allows store associates to check out customers with a mobile device, in its U.S. stores.

Meanwhile, Macy’s Inc.—No. 6 in the Top 500 and the biggest online apparel retailer—plans to redesign Macys.com and its mobile experience this year. “Consumers seek the same inspiration online as they do at a flagship store on State Street in Chicago,” said Macy’s CEO Jeff Gennette, at the Shoptalk conference in Las Vegas in March.

The established apparel retailers are working hard to keep pace with competition that includes start-ups—including some flush with venture-capital dollars—and, of course, Amazon. The e-commerce giant has made a big push into apparel, such as launching a variety of private-label apparel brands—including some intended to appeal to more fashion-conscious shoppers.

Walmart, Amazon’s arch-nemesis, is not standing still, either. Walmart has been purchasing online retailers that can expose the big retailer to a different, more affluent audience online. An Internet Retailer analysis of Walmart’s acquisitions of Jet.com, Moosejaw, Shoebuy.com Inc., ModCloth and Bonobos finds that, as a group, the acquired businesses’ audiences have higher incomes and more education than average visitors to Walmart.com.

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But, as it goes after bigger spenders, Walmart also is introducing low-cost clothing brands for women, kids and plus-size customers, a move seen as an attempt to lure shoppers as Amazon gobbles up more apparel sales.

In a May 2018, first-quarter earnings call with analysts, Kary Brunner, Walmart’s director of investor relations, said the retailer’s new apparel brands are part of “stepped-up” focus on private brands generally.

The online apparel market will almost certainly continue to grow as more people become comfortable buying clothing, shoes and accessories on the web. Increasingly, consumers look at e-commerce as just another way to buy things. They expect to engage with retailers on smartphones, computers and in stores without friction. So, while stores are not dead, the store-only shopper could become a thing of the past.

This is an excerpt from Internet Retailer’s recently published The Online Apparel Report. The report is available as part of Internet Retailer’s U.S. Reports Pro Membership and as part of Internet Retailer’s Platinum All-Access Membership. Single copy sales are also available.

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