6 Retailers That Can Withstand the Amazon.com, Inc Onslaught

There are several retailers that seem to have credible defenses against Amazon.These retailers are likely to survive the Amazon onslaught with minimal damage to their topline growth.

Mar 27, 2014 at 2:55AM

Amazon.com (NASDAQ:AMZN) has forever changed the retail sector and the way we shop. Many physical stores have felt the impact of Amazon's disruptive pricing habits, and as a result have seen their revenues fall off a cliff. Retailers such as Best Buy, Staples, Barnes & Noble, and Sears are some of the unfortunate victims. Meanwhile, Amazon continues growing its topline at the expense of other retailers.

Source: Census Bureau

But there are several retailers that seem to have credible defenses against Amazon. Mark Miller, a William Blair analyst, together with his colleagues, conducted some studies last year on the retailers that are least likely to lose market share to Amazon.  From their study, TJX (NYSE:TJX), Walgreen (NASDAQ:WBA) and Cabela's were found to be the most Amazon-resistant retailers.

In yet another similar study by Morningstar, Advanced Auto Parts (NYSE:AAP), PetSmart, and Ross Stores (NASDAQ:ROST) were found to be the least vulnerable to Amazon.

Let's look at the reasons why these six stores are not likely to be affected by the Amazon onslaught.

TJX
TJX is an off-price retailer, whose goods sport a 19% overlap with Amazon. That's much lower than the average retailer with a 46% overlap. TJX operates as 3,000 stores under the T.J. Maxx, HomeGoods, and Marshalls brands, as well as other names in Europe and Canada. TJX's popularity with consumers stems from its ability to sell clothing at dirt cheap prices -- about 20% to 60% cheaper than specialty retailers and department stores.

TJX is able to cut prices to the bone simply because it has perfected the art of cutting great deals with desperate clothing makers and apparel stores. The company's 800 buyers scour the markets for order cancellations, manufacturer overruns, and closeouts. They then buy this merchandise for a song. It does not advertise and it only recently launched a website. 

Walgreen
Walgreen is the country's largest drugstore chain. It has formed large drug distribution partnerships with companies, such as AmerisourceBergen, and overseas firms, such as Alliance Boots. This gives it a huge international reach. Walgreen filled 213 million prescriptions in the first quarter alone, a record for the company.

Advanced Auto Parts
Advance Auto Part stores offer unique services to their customers that would be very hard to duplicate online. It would be difficult for online retailers such as Amazon to match its retail convenience and customer service needs.

PetSmart
The pet food business has ample room for growth in the e-commerce space, considering that online sales account for less than 3% of overall sales. But selling pet food online is tough.

Pet foods are normally quite cheap, but can be bulky when ordered in large quantities. This can substantially increase the cost of shipping and deter online purchases. Pet Food sells exclusive merchandise that is not normally found in the average pet food shop at marked up prices. PetSmart also offers services like pet grooming and lodging.

Ross Stores
Ross Stores is an off-price apparel seller of name-brand and designer goods. Its prices are often marked down well-below those of the average retailer. It constantly changes its merchandise mix, so that customers can always expect to find something new and exciting.

This makes for the "treasure hunt" experience, that customers love. Ross Stores has strong relationships with thousands of clothing vendors. The company allows local store managers to stock merchandise according to the local consumers' tastes and preferences.

Foolish bottom line
Most retailers face some competitive risk from Amazon, either based on a huge degree of overlap between their goods and Amazon or their prices are too high compared to Amazon. There are, however, a few retailers whose operations face little threat from Amazon. These companies are likely to see their toplines continue to grow with little disruption from the Internet giant.

6 stock picks poised for incredible growth
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Joseph Gacinga has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers