Will Amazon Take Over The Retail Space In 2016?
Amazon.com Inc. (NASDAQ: AMZN) has proven itself as a force to be reckoned with over the past year. The e-commerce retailer has infringed on everyone's market share from TV streaming services to electronics retailers and even grocery stores.
That market dominance has helped the company's shares rise 113.56 percent so far this year and given investors reason to believe the company will continue to soar in 2016.
However, some are questioning whether or not Amazon's market expansion can continue and if the firm will be able to compete against brick-and-mortar rivals.
Target And Wal-Mart
Both are discount retailers that offer customers a wide variety of goods at low prices. All three compete based on the price of their goods and the margins they are able to generate and next year will likely be a turning point in the battle between the three.
While both Walmart and Target have to pay in order to run their physical stores, it's Amazon that has the highest operating costs of the three with.
The online retailer's operating costs make up 32.3 percent of its sales. The reason for that is shipping.
Amazon struggles with high shipping costs while Target and Wal-Mart are able to push in-store pickup to reduce the cost of sending products to customers' doorsteps. However, Amazon is rumored to be developing its own delivery system, which would significantly cut costs in 2016.
Stores That Can Stand Up
While Amazon's popularity has weighed on many stores selling in a specific niche, others have been able to stand up against the retail giant as their customers remain uncomfortable buying products online. Signet Jewelers Ltd (NYSE: SIG), which operates chains like Kay Jewelers and Jared The Galleria of Jewelry, hasn't seen much of a decline in shoppers as the company's mid-range customer base still prefers to come in to stores rather than buying online.
The same is true for Ulta Salon, Cosmetics & Fragrance (NASDAQ: ULTA), which has built a cosmetics empire in the suburbs where rent is cheap and customers can come in to try before they buy.
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