Any retail investor that fails to see that Amazon.com, Inc. AMZN will continue to take market share in the retail space for years to come is in denial. J.P. Morgan analyst Matthew Boss recently took a close look at Amazons overlap with national brands sold at department stores.
Boss found that Amazon’s average department store brand overlap is currently at 66 percent (89 percent when adding resellers), with the highest overlap at J C Penney Company Inc JCP (73 percent), Kohl’s Corporation KSS (72 percent) and Macy’s Inc. M (67 percent). Boss mentioned that Nordstrom, Inc. JWN (50 percent) and Dillard’s, Inc. DDS (66 percent) also have significant overlap.
In terms of fighting the Amazon invasion in the space, Boss believes retailers will need to rely on convenience, value and/or innovation.
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In terms of convenience, he believes that Dollar Tree, Inc. DLTR and Dollar General Corp. DG are well-positioned to stave off Amazon.
On value, off-price retailers TJX Companies Inc TJX and Burlington Stores Inc BURL also have a fighting chance.
When it comes to innovation/differentiation, Boss names Nike Inc NKE, VF Corp VFC, Lululemon Athletica inc. LULU and L Brands Inc LB as favored names.
Disclosure: the author holds no position in the stocks mentioned.
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