Is Amazon.com, Inc. (NASDAQ:AMZN) Killing America’s Retail Industry?
Amazon.com, Inc. (NASDAQ:AMZN) recently announced a new partnership with Sears Holdings Corp (NASDAQ:SHLD), which would allow Sears to sell some of its products through Amazon.com’s platform. This marks a crucial turning point in Sears’ retail strategy given that the company owns over 100 million square feet of prime retail space.
Sears is not the only retailer that has felt the brunt of Amazon.com’s rapid rise in the retail space, other retailers including Target Corporation (NYSE:TGT) and Wal-Mart have also recorded declining sales and profits as consumers prefer to shop on Amazon.com.
As a physical retailer, Sears owns prime retails space in high-end malls across the United States; hence, the recent partnership with Amazon.com indicates that the physical retail-shopping model might be dying. Amazon’s acquisition of Whole Foods Market also demonstrates the online retailer’s confidence that its distribution model can work in the retail food industry.
Amazon recently met with distributors of grass-fed meat and poultry products as part of its efforts to grow Whole Foods Market. However, some analysts believe that Amazon might have overextended its reach by buying the troubled whole foods retailer.
Another major retailer that has suffered from Amazon’s rise in the retail sector is Target stores. However, Target is in a better position than Sears in the retail market although both have suffered declining sales, especially in the in-store purchases.
Target recently announced plans to invest $7 billion in smaller stores and other initiatives. This is a brilliant move on Target’s part, as it will enable the retailer to penetrate more markets, while minimizing setup and operational costs.
However, despite many physical retailers fighting the rise of Amazon.com as the preferred retailer of choice, the company has continued to gain a greater share of the US and global retail markets.
Therefore, the question remains whether Amazon shall keep growing its market share, while shrinking the available market for physical retailers.
Early investors in Amazon have reaped excellent results given that their stock portfolios have skyrocketed in value, but does the company have the potential for more growth in future?
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