How much damage has Amazon done to the rest of the retailing industry? A lot — and I have the numbers to prove it.
Amazon is now worth roughly $483 billion — and its stock has traded above $1,000 a share for the last few days, up 37 percent over the past year.
In fact, Amazon was worth “only” $30.8 billion 10 years ago.
But there’s another side to the Amazon rise to power. And it’s not just in the number of sales lost by other retailers to the internet Goliath.
I asked David Aurelio, senior research analyst for Thomson Reuters, to determine how much value the rest of the retailing industry has lost while Amazon’s shares have been ascending.
Today, for instance, a group of 35 retailers in the apparel business are worth $110.6 billion, according to Aurelio. That’s down from $135.9 billion a year ago.
I have to mention that all of these figures are based on publicly traded companies in each area of retailing. But the figures don’t include companies, public and private, that may have gone out of business.
Put those failed companies into the equation, and the lost equity would have been even larger.
Automotive retailers (19 of them) are now worth a cumulative $66.6 billion compared with $88.3 billion last year; seven department store companies are now worth $25.4 billion versus $31.4 billion; and 27 distributors are worth $29.6 billion compared with $32.7 billion.
General merchandise stores (six of them) are down to just $67.5 billion in value compared with $94.8 billion in 2016, and 10 companies in food retailing — an area that Amazon just entered, amid antitrust concerns — are worth $41 billion compared with $55.6 billion last year.
Amazon, of course, isn’t responsible for all this damage. The US economy hasn’t been performing well, so some of the 156 companies in Aurelio’s search could be suffering from consumer skittishness in addition to Amazon-itis.
But on the other hand, these valuations were dropping at a time when the stock market as a whole was rising thanks to the Federal Reserve’s easy monetary policy.
Some areas of retailing haven’t been hurt by Amazon.
The eight companies in the computer and electronics retailing business saw their cumulative valuations rise to $20.1 billion from $14.1 billion last year. And the two home improvement retailers in the calculation are now worth $247.9 billion, up from $238.5 billion in 2016.
Electronics have been an area shielded from Amazon’s clout because of consumer loyalty to companies like Apple. Consumers may be less likely to buy home improvement products on Amazon because of their size and weight.
But Amazon is undoubtedly an equity killer. When you put all the 157 companies Aurelio used in his analysis — including Amazon — Jeff Bezos’ behemoth is now worth 17.5 percent of the total.
A year ago, Amazon was only 12.2 percent of the total capitalization. Three years ago, it was just 6.7 percent, and 10 years ago only 1.7 percent of the total.
And Bezos is well on his way to becoming the richest person on the planet.
There’s probably a lesson in here somewhere, but I have to go. The UPS guy is at my door delivering some porcelain paint I just bought from … well, you know.
Source: New York Post