Displaying items by tag: Amazon

(New York)

In a sign of both the changing nature of retail and the epidemic that seems to have gripped the sector, Amazon will very likely surpass Macy’s to become the largest US retailer of clothing this year. The truth is Amazon might already be the largest, but it does not disclose an exact figure. Analysts say clothing could be a $45-$85bn business for Amazon each year, and it is growing its presence quickly. One of the attractions of the segment is that margins in clothing are higher than in electronics or food, which will help fund the company’s other endeavors.

FINSUM: Compare this to Macy’s, which is dramatically cutting back its physical location as it revamps its strategy.

(Seattle)

In a sign that should make all retail employees shudder, Amazon has finally launched its staff-less store. The store has no staff and no checkout, a development the company calls “just walk out” shopping. Shoppers are tracked by sensors all over the store, and the system allows Amazon to just automatically charge them when they leave. The concept is technically called Amazon Go, and this newest convenience store is Amazon’s thirteenth brick and mortar location in the US.

FINSUM: In our view, this is absolutely genius. While we hate the idea of fewer retail jobs, and don’t support that, Amazon is basically developing a way to get rid of the tedious checkout line.

(San Francisco)

Apple debuted its most important product in years just a few months ago—the iPhone X, but it may be closing in on what could not only be a great new product, but a new segment. That new device would be Apple’s version of the smart speaker business led by Amazon’s Echo and Google’s devices. Apple’s version is called the HomePod, and had its debut delayed from late last year to early this year, missing the holiday season. Of course, the device itself may be secondary the the digital personal assistant system, in Apple’s case Siri, as it is this bit of software which keeps users in the company’s ecosystem, which means higher spending.

FINSUM: The devices are merely vehicles for the digital assistants, which are in turn genius products for keeping consumers spending on services.

(New York)

Most of the market’s panic over retail centers on the threat from Amazon and the shift to ecommerce from brick and mortar (admittedly related threats). However, there is more out there to be worried about than just those. In particular, the apparel market is not growing very quickly, as it is losing market share to other areas of consumer spending, such as restaurants, entertainment and wellness. Staffing costs are also rising at the same time as price pressure is growing, putting a strain on margins.

FINSUM: Amazon’s growth in apparel sales is also well-outpacing the overall industry’s growth rate, which means it is already stealing market share on top of these other challenges.

(San Francisco)

There is no doubt about it, the FAANG stocks—Facebook, Apple, Amazon, Netflix, and Google—were a huge force is delivering 2017’s great return. But it might be time to remove them from your portfolio, at least as Barron’s argues it. And if not removing them, then at least reducing exposure. The stocks count for a huge portion of many funds, so investors may have more exposure than they realize. The stocks have seen a massive run-up in valuation, but that makes them look increasingly vulnerable. Barron’s also cites the increasing risk of regulation of the sector, which could prove a weight on values.

FINSUM: The tech industry has grown very large and dominant, and seems to have its own cycle versus the rest of the economy, all of which makes it very hard to call a top. There are some dark clouds gathering on the horizon, but nothing looks like it is imminently going to bring the FAANGs down.