Fears of Amazon appear overblown as companies that fretted competition went on to beat market

Walmart, the largest brick-and-mortar retailer in the world, bucked Amazon fears this week. The discounter reported e-commerce sales up 43 percent during the fourth quarter and clinched online sales growth of 40 percent for all of 2018. Though Amazon still claims half of all e-commerce sales in the U.S., Walmart’s investments in its online marketplace gave management reason for optimism despite the looming competition.

“We’re making progress in e-commerce,” CEO Doug McMillon said on a call with analysts and investors. “Our focus remains on earning repeat [shopper] visits and strengthening our assortment of merchandise.”

To be sure, the outperformance could be related to the Trump administration’s tax cut, which might have offered a temporary boost for brick-and-mortar retailers and other Amazon competitors in a secular sales decline. A strong economy, in part because of the tax cut, has also put a wind at the back of many companies that were struggling.

“It is possible that companies have retooled to better compete with Amazon,” Noah Weisberger, AB Bernstein chief U.S. strategist, wrote in an email. “The labor market is very strong, wage growth is moderate, the tick up in participation should not be overlooked as a positive, and the balance sheet is very healthy.”

Amazon built a reputation in recent years for pivoting into new businesses or sectors and crushing its competition through renowned logistical work and aggressive price control. That practice is perhaps best witnessed in its ability to deflate the market for books, where Amazon first began taking market share from brick-and-mortar retailers like Barnes and Noble.

So when the e-commerce giant announced plans in 2017 to acquire Whole Foods, groceries chains like Kroger swooned. Sears Holdings proved another famous victim of the so-called Amazon effect, closing hundreds of locations and filing for chapter 11 bankruptcy protection last year. A handful of other notable retailers, including J.C. Penney, Toys “R” Us and Best Buy have also struggled at the hands of more e-commerce sales.

Source link

Leave a Comment

'Empire' actor Jussie Smollett charged with faking racist attackJussie Smollett: Empire star 'staged hoax attack over salary'