Amazon.com has discovered a formula for success in the world of retail sales. They skip having a whole host of bricks and mortar stores and sell online. The cost of their success has been borne by retailers far and wide. Many have gone out of business and CNBC discusses large department store stocks heading for zero due to losing business to Amazon.com.
Retail could be one of the best contrarian plays out there, as long as investors steer clear of the nation’s department stores.
Eaton Vance chief equity investment officer Eddie Perkin is making that call.
“You have to be careful with the department stores. They’re struggling, and they’ll continue to struggle under the threat of Amazon and just general softness in retail,” Perkin said Wednesday on CNBC’s “Trading Nation.”
Earlier in the day, Perkin told CNBC that “department stores are heading to zero eventually.”
“The challenge is they have debt. They have a lot of assets that are losing money,” he added.
Retailers like J.C. Penney, Macy’s and Nordstrom are closing stores like mad. But which retailers will survive in the era of Amazon? CNBC writes that good quality malls still have lots of foot traffic and sales. There are two factors at work here. Building too many malls virtually side by side has caused a glut and until the excess is driven out of the market retailers are not only fighting Amazon but themselves. And there are reasons why people still go to the store in the era of Amazon. When you need information, need a product right now or simply find it an interesting experience you will go to a store instead of buying online. Companies that keep their footprint efficient and provide a useful and interesting shopping experience with decent pricing will survive. Which will these be?
Likely Survivors in the Era of Amazon
Money writes about stores that may actually survive the death of retail.
With the rise of e-commerce, news of massive store closures and bankruptcies for legacy retail brands have become business as usual in today’s economy.
But according to experts in the industry, the retail apocalypse will not lead to the desolate and abandoned brick-and-mortar landscape that many expect will come as a result of Amazon and other digitally native retailer’s continued dominance.
Which retailers are these any why will they survive in the era of Amazon?
In each case the company has combined strategies to offer competitive pricing, a unique shopping experience, customer service and an online presence as well.
Profiting from the Profitable
An alternative to trying to figure out which retailers will survive in the era of Amazon is to go with real estate investment trusts and pick and choose which malls to purchase. There are and will always be busy and profitable malls. Collecting rent checks from the survivors is a viable option.