Consumer industries Amazon will crush next: Bernstein

Consumer industries Amazon will crush next: Bernstein


The retail stock carnage will only get worse as Amazon continues to mow down certain corners of the sector, according to Bernstein.

“We are currently in the midst of a generational shift in consumer behavior and how companies bring their goods to market,” the firm’s analyst Ali Dibadj wrote in a note to clients Friday.

“The only thing one can be certain about is that things will change and companies will be disrupted, and when it comes to disruption there has never been a company quite like Amazon.”

The retail sector is having a rough year so far as the industry struggles under the Amazon onslaught.

The SPDR S&P Retail ETF’s declined 9 percent year to date through Friday compared to the S&P 500’s 15 percent gain and Amazon’s 50 percent surge in the same time period.

Dibadj shared his imminent Amazon disruption predictions for each consumer subsector:

1. Consumer packaged goods: “We think beverages/snacks companies will fare better than household & personal care companies, while packaged food companies are likely most at risk.”

2. Restaurants: “The benefits of a potential national delivery network through Amazon Restaurants outweighs the relatively modest risk presented by Amazon’s placing possible downward pressure on food prices (proteins appear more insulated).”

3. Transportation: “Structural volume growth in e-commerce will benefit the network carriers, and the significant hurdle posed by the costs of last mile delivery is likely to result in better pricing.”

4. Broadline retailers: “We think the scale of Walmart’s existing network of distribution centers, stores, and new pick-up points we expect … will allow them to adapt well to the higher costs, while smaller grocers will be more damaged.”

5. Specialty apparel retail: “We see the off-price retailers retaining their competitive advantage in apparel, for now.”

6. Healthcare services: “We think Amazon’s entry into pharmacy would be negative for independent pharmacies, somewhat negative for national pharmacies and distributors, and we increasingly see this as long term negative for” pharmacy benefit managers.

The analyst also explained how the internet and social media have generally hurt the power of traditional brands, further adding to the companies’ difficulties.

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