Home Daily Blitz There’s More Pain Ahead For Small Retailers In Amazon’s Crosshairs
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There’s More Pain Ahead For Small Retailers In Amazon’s Crosshairs

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The following is an excerpt from Lauren Thomas | July 24, 2017 | Thefiscaltimes.com |

Amazon's "hulking shadow" just won't go away, and it's only going to grow, according to a new note from Moody's Investors Service.

"Almost every sub-segment of retail is feeling the looming shadow of Amazon's ever-increasing presence online," Charlie O'Shea, Moody's lead retail analyst and author of the report, said.

He used Prime Day as an example of how Amazon is separating itself from the rest by creating its own shopping event and leaving the so-called little guys scant room to compete.

"Virtually every sub-segment of retail, other than auto retail and pharmacy, are caught in the cross-hairs of Amazon's constantly-morphing online presence," O'Shea said.

Aside from the internet giant, Moody's also expects other "bigger competitors" — Target, Best Buy and even department stores — to continue to consolidate ahead of "smaller competitors." This will put further stress on smaller retailers — J. Crew, GNC and Abercrombie & Fitch, as examples — and elevate the risk of default, the firm has predicted.

"Competitors going up against mega-retailers such as Walmart or Amazon face a Darwinian choice: fight a price battle with these retail leaders, which they will likely lose, or find someone weaker from whom they can grab market share," O'Shea wrote.

The problem struggling retailers face is that these companies aren't "assessing who their competitors really are." Too many retailers see their competition as much "narrower" or more "predictable" than it is.

J. Crew, for example, should be looking at a Target or a department store like J.C. Penney as its competition, because they're all in the business of selling clothing. But not everyone has that mindset, Moody's pointed out.

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