Once upon a time Amazon.com (AMZN) billed itself as the "Earth's Biggest Bookstore." The campaign irked the existing brick-and-mortar stores so much that Barnes & Noble even sued Amazon, arguing that the website was a "book broker" rather a conventional store.
Suffice it to say the suit didn't do much to slow Amazon's roll. Sixteen years down the road Barnes & Noble (BKS) is running on fumes, Borders is dead, and Amazon isn't just a bookstore but a general merchant picking off specialty stores one by one.
Today the investing world believes Amazon will take down Best Buy (BBY) as its next victim. But Paul Hickey, co-founder of Bespoke Investment Group, has been analyzing retail sales trends and believes Amazon has much bigger targets in sight. Forget books and electronics; Amazon is eroding sales at our nations largest retailers, Target (TGT) and Wal-Mart (WMT).
"We're definitely seeing the general merchandisers lose share and it's definitely reflected in their stock prices over the last four or five months," Hickey says in the attached video.
Amazon may not have as far to go as you think. For one thing, the online juggernaut is already approaching Target-level revenues, having booked $61 billion in sales last year compared to the latter's $72 billoin. Wal-Mart's top line status is still way out of reach at $464 billion, but the trend isn't its friend.
Amazon has a few edges. For one, as Hickey observes, Amazon Prime is offering speedy delivery of products most associated with Big Box like groceries. Another advantage is Wall Street, which demands Target and Wal-Mart post earnings, while Amazon ignores profitability in favor of growth. That edge allows Amazon to invest enormous sums in things like Kindles and fulfillment centers without having to worry about a shareholder revolt.
Hickey isn't suggesting Wal-Mart is going to be under siege anytime soon, just that they ought not get complacent. Amazon has proven to be a much tougher foe than anyone could have imagined back in the '90s.