Under these circumstances, eBay achieves classic value investment criteria. In particular, eBay generates a lot of cash but maintains a low stock price.Read more
Barnes & Noble (NYSE: BKS) will probably join Sears and JC Penney (NYSE: JCP) in the retail graveyard this holidayRead more
Sprouts’ dilemma is that Amazon is just one of its competitors. Besides Amazon sprouts has to compete with Kroger (NYSE: KR), Walmart (NYSE: WMT), Aldi, and Target (NYSE: TGT) to name just a few.
For example, Kroger has a close relationship with Instacart and it is America’s largest organic grocer. For example, Kroger sold $1 billion worth of organic produce in 2017, Progressive Grocer estimates. In addition, Kroger sold $2 billion worth of its Simple Truth organic grand in 2017, Progressive Grocer calculates.
Under those circumstances, I cannot see how Sprouts can compete and survive as an independent company. Instead, Sprouts’ future will be as part of a larger organization – such as Aldi Nord or Kroger.Read more
The $15 an hour minimum wage could have killed 20,000 temporary jobs at Amazon.
To clarify, Quartz estimates Amazon will hire 100,000 temps for holiday season 2018. In contrast Amazon hired 120,000 temporary workers for holiday seasons in 2016 and 2018.
Amazon no longer needs the 20,000 temps because of its deployment of Kiva robots in fulfillment centers, Citi analyst Mark May theorizes. In particular, Kiva robots eliminate workers who pull merchandise from the shelves.
Instead, the robots literally bring the shelves to the workers who pull and pack and the goods for shipment. Quartz claims, Amazon cut the time needed to pull and pack an order from an hour to 15 minutes with robots.
To be fair to Bernie, Amazon would have deployed the robots with or without the $15 wage. In fact, the robots could have made the $15 wage possible by reducing the size of the labor force. Amazon is paying workers more because it has fewer of them thanks to robots.Read more
It should scare brick and mortar retailers because Amazon Go could generate profits similar to Amazon itself.
For instance, Amazon Go could generate up $2,700 a square foot in annual sales per square foot, Brick meets Click, claims. In contrast, Costar estimated Walmart’s annual sales-per-square foot was $325 in 2018.
Thus Amazon Go’s sales per square foot could be seven times those of Walmart’s. However, the Apple Store’s sales per square foot were nearly twice Amazon Go’s at $5,546 in 2017.Read more
BestBuy (BBY) needs more partnerships because it is not making that much money.
For instance, BestBuy recorded an operating income of $335 million and a net income of $244 million for 3rd Quarter 2018. However BestBuy recorded a gross profit of $2.229 billion on revenues of $9.379 billion for the same period.
Beyond that BestBuy reported an operating cash flow of $904 million, an investing cash flow of $127 million, and a free cash flow of $710 million in 3rd Quarter 2018. Thus, BestBuy has a cash rich business.
On the other hand, BestBuy needs to keep more of that cash. The partnerships are important because they could give BestBuy more cash flow without costly expansion.
The goal of Smartly; however, is also to counter Amazon (NASDAQ: AMZN). Target’s management hopes Smartly will lure in customers by offering prices lower than anything Amazon can provide.
Few retailers are in more danger from Amazon than Target. Amazon competes for Target’s core customer base; the urban and suburban middle class, in particular.
For example, Target’s target customer is a 35-year-old suburban soccer mom. Unfortunately, that soccer mom is the person most likely to belong to Amazon Prime.
An obvious use of Smartly is to get people under 30 (Millennials) used to shopping at Target. Target hopes to turn those Millennials into loyal customers by the time they have kids.
A Kroger/Walgreen hybrid is an obvious use of the capabilities provided by Ocado. A robotic fulfillment center could obviously support both Kroger supermarkets and Walgreen drugstores.
Moreover, a Walgreen drugstore is a logical addition to the 2,782 supermarkets Kroger operates. In addition, Kroger food brands like Simple Truth will be a logical addition to Walgreens inventory.
Importantly, Kroger operates 37 food manufacturing facilities across the United States. Therefore, Kroger offers Walgreens a source of low-priced food products to counter Amazon’s discounting.
Equally important is Kroger’s ability to provide hot takeout meals, meal kits, deli foods, and hot entrees to Walgreen. Markedly, Kroger has a good relationship with the delivery specialist Instacart.
Additionally, an obvious use for Instacart is delivery of Walgreens prescriptions. America’s growing legion of senior citizens will be obvious customers for prescription delivery.
Small-box concepts like Nordstrom Local and Home Goods also have lower real estate and labor costs. They could easily use such small-box concepts as pickup locations for online orders.
Popup stores; like The [email protected]’s, are a classic solution for this dilemma. For instance, Macy’s could rent or lease space to pop up store operators.
Macy’s (M) might interest electronics, auto and other brands in pop-up stores. For example, Tesla (NASDAQ: TSLA) operates auto showrooms in some Nordstrom locations.
Obvious brands for Macy’s to tap for pop-ups include Apple (NASDAQ: AAPL), Toyota (NYSE: TM), Ford (NYSE: F), General Motors (NYSE: GM), The Walt Disney Company (NYSE: DIS), Amazon, and clothing makers. A fascinating idea for Macy’s to consider is Amazon Go in Macy’s.Read more
Normally nobody would ask if a company that reported $122.662 billion in revenues last year can survive. We are notRead more