Moody’s: Amazon Does Not Dominate the Retail Sector

Moody’s: Amazon Does Not Dominate the Retail Sector

Amazon’s operating results would still need to improve before the e-commerce giant can claim to be a dominant force in the U.S. retail market, according to Moody’s Investors Service.

Charlie O’Shea, Moody’s vice president and lead retail analyst, said that Amazon’s stock has performed better than its competitors due its growth potential, which inadvertently downplays the real-time operating performance of rivals such as Walmart and Costco.

Leadership Myths

Even as Amazon recently acquired Whole Foods, it would take long before it can be a market leader in the grocery business, O’Shea said. Moody’s believes that the acquisition will do little for Amazon to dominate the supermarket business by 2019.

He noted that online retail accounts for an estimated 10% of retail sales in the country, although a report predicted that would surge to 17% by 2022. Amazon would continue to take a significant slice of the e-commerce sector, according to Forrester research.

Growing E-Commerce

The expected increase in e-commerce sales in the next five years may stir more competition, which is why PriceManager noted that minimum advertised pricing policy and other competitive intelligence tools will be more relevant. These resources will help any online retailer to keep their business afloat and monitor their rivals’ pricing activities.

On the other hand, traditional retailers would find it difficult to go digital. Their struggles would take place amid a decline in foot traffic and more store closures. In 2017 alone, more than 8,600 shops are expected to shut down in the country. This figure exceeds the combined number of closures in the last two years.

Amazon’s operating results may be less than stellar compared to other large retailers in the U.S., but there’s no doubt that e-commerce is slowly covering more ground in the retail sector. Do you think that it will take several years before Amazon can emerge on top of the retail industry?