Amazon (AMZN), much to the chagrin of those who love to hate it, continues to change the face of retailing. Witness the wave of companies who recently announced that for the first time ever, Black "Friday" will actually begin on none other than Thursday--Thanksgiving Day.
Wal-Mart (WMT), Target (TGT), many other companies recently announced details of their earlier-than-ever Thanksgiving shopping kick-offs, as they try to combat Amazon's ever growing market dominance in the online retailing sector. Anti-Amazon investors, and there are a lot of them, will try to argue that this unprecedented move has nothing to do with the online gorilla, whose 2013 sales are expected to be nearly $80 billion, with earnings of $1.77 per share, far above analyst expectations for revenues of $62 billion for 2012 on a loss of a penny per share.
Naysayers love to point to Amazon's outside-the-box fundamentals and ignore the fact that since the very beginning, CEO Jeff Bezos has been relentlessly focused on the long-term goal of gaining all the market share Amazon can, while also offering the best customer service and the best pricing usually available. (See article "14 Years Ago Jeff Bezos Told You How to Take Over the World.) The company's growing dominance and popularity has finally forced traditional retailers to extreme measures, such as Wal-Mart and Target now opening their doors for commerce on one of America's most hallowed days.
Other changes also point to the retail war against Amazon. In September 2012, Wal-Mart finally figured out that it needed to stop selling the Amazon Kindle in its stores. Wal-Mart customers were using the Kindle to compare prices while shopping in Wal-Marts, and often finding better pricing at Amazon, which meant the customers had no need to stand in line and carry items home on their own.
With free shipping on millions of items for Amazon Prime members, Amazon users have long used brick and mortar retailers to "kick the tires" of items they want to buy, and then see if they can get the same product from Amazon at a lower price. Usually, they could. Ask Best Buy (BBY), whose stock has taken a precipitous drop over the last couple of years, falling from $44 to Monday's close at $15, and whose very existence is at stake. I believe Best Buy will be out of business no later than 2015 unless the retailer can successfully execute a massive overhaul of its business model, so that it can somehow actually compete with Amazon.
So who would have ever thought that retailers would dive right into a Day of celebrating thankfulness and time with family?
Well, it now has happened, and the floodgates have opened. Retailers understand that they can no longer wait until Friday to start their sales-- because Amazon is open 24/7, 365 days a year. Savvy shoppers, often the women of the family, for years have found some time to shop online while the rest of the family is glued to Thanksgiving football games or while they were sleeping off the turkey. Online shopping also saved them from having to abandon their family and guests on Black Friday and the weekend.
After all, how many people really want to get up at 5am the day after Thanksgiving to drive in the cold and dark, find a safe parking place and rush through the doors (with what always proves to be some rather aggressive shoppers)... only then to stand in long lines, wait to check out, haul everything to the car and load it and then unload it yet again at home. While brick and mortar retailers still account for the vast majority of retail sales, the statistics are changing rapidly. Think Amazon has any room left to grow? Online sales are growing at about 15% annually, while still only accounting for about 8% of total retail sales in the U.S.
Add to all this the fact that most people under 30 have grown up using the web, and for them, mobile is an extension of their right arm. (Brick and mortar shopping will one day be as bizarre to a generation of consumers as dialing a rotary phone is now to people who grew up in the 1960s.) Today's youth uses mobile for nearly everything and the growth in that sector is changing everything-- just ask Facebook (FB). The idea of spending two hours to go shopping at an actual store (and perhaps not even being able to find what they want), versus shopping online and being done in sometimes less than 2-3 minutes, is no contest.
Here's the deal: Amazon offers black Friday pricing 365 days a year, and they are always open.
Amazon is the bellwether for all online sales. Even if you are one of many who hate Amazon the stock (perhaps largely because you missed most of its gains over the last 4 years), most everyone I talk to loves Amazon the business, and they use it regularly.
Amazon's stock is down from its recent high of 264 to a November 12th close of 226. It may be time to look at adding some shares to your portfolio--with a multi-year time horizon, either through outright shares or perhaps some January 2015 call options. Wal-Mart et al know this online shift is happening, and are changing their policies to try to compete on every front they are able. Their desperate attempt to bring people into their stores on the day Abraham Lincoln established as a day of Thanksgiving is evidence of the tectonic shift that is underway.