Inverting Amazon Who will survive

[Saluki]

I generally hate retail, but in thinking about what companies won't (can't?) be disrupted by Amazon, 2 jumped out at me: Lowes and Home Depot.

 

When I order drywall or pavers from Lowes or HD to be delivered, it comes from the local store less than 5 miles away.  You can't ship heavy bulk items like 80lb bags of cement that sell for $6 via a distribution facility in Kentucky. Things like paint also don't travel well by mail, and you (or more likely your wife) will go in with something that will be color matched at the counter and mixed on the spot.

 

Local distribution centers, specialized delivery trucks and large wholesale operations for contractors are a very difficult moat to breach. 

 

Maybe the retail apocalypse is good news for Lowes and HD because you can acquire and redevelop large boxes from places like Sears at attractive prices?

[TwoCitiesCapital]

Until recently, I was buying "brands".

 

Ralph Lauren

Under Armour

Nike

Louis Vuitton

Victoria's Secret

Tapestry (Coach, Kate Spade)

Etc

 

Amazon may disrupt their delivery mechanism, but not the desire for the products they create or the allure of the brand.

 

Only reason I stopped buying the basket was because many names had rallied 20-30% before I could get full positions. I only on LB (Victoria Secret) now given it's sharp correction, but will buy others on weakness again.

[CorpRaider]

Seems like the market agrees with your hypothesis on L and HD and it is reflected in their valuations. 

[Scuttlebutt Plunger]

Tractor supply - shipping 50 lb bags of feed would be inefficient.  Some CPG companies will be immune, though this isn’t reflected in their compressed valuation.  AMZN is trying its hand at private label but will fail in certain categories...  batteries certainly isn’t one of them.  Ordered some AMZN coffee the other day, have yet to try it.

 

I have briefly looked at FDX, given fears of shipping.  May be of interest.