There has been a lot of speculation about Amazon Inc.'s arrival into Australia and it's not hard to see why this would have a lot of Australian retailers worried.
Anyone who has looked at the online retailer's U.S-based website will see quickly that nearly every retail category is pretty well covered.
Although Australian consumers won't have the full range of categories initially, you can be pretty sure that Amazon will look to expand its range fairly quickly if it can develop a fast and efficient method to ship products across the country.
As a result, I think it is important that investors take some time to understand which Australian retailers might be most exposed to the threat from Amazon.
With that in mind, here are the 10 ASX retailers that I think will be most heavily impacted by the arrival of Amazon:
| Company | Market Cap | Annual Sales | Retail Categories/Segments at Risk |
|
Wesfarmers Ltd (ASX:WES)
|
$49.8 billion | $67 billion | Supermarket groceries, Target, Kmart, home improvement, Officeworks |
|
Woolworths Limited (ASX: WOW)
|
$34.3 billion | $59 billion | Supermarket groceries and household goods, BIG W |
| Metcash Limited (ASX: MTS) | $2.1 billion | $13.2 billion | Groceries, household goods, home improvement |
| Harvey Norman Holdings Limited (ASX: HVN) | $4.6 billion | $7.7 billion | Technology and electronics, small home appliances, home décor |
| JB Hi-Fi Limited (ASX: JBH) | $2.8 billion | $5.6 billion | Fast moving electronics, small home appliances, DVDs, music |
| Myer Holdings Ltd (ASX: MYR) | $912 million | $2.8 billion | Apparel, homewares, general merchandise |
| Super Retail Group Ltd (ASX: SUL) | $1.9 billion | $2.6 billion | Sporting equipment, outdoor and leisure goods, auto care |
| Premier Investments Limited (ASX: PMV) | $2.2 billion | $1.2 billion | Fashion and apparel |
| Reject Shop Ltd (ASX: TRS) | $123 million | $850 million | Discount consumer goods, homewares |
|
RCG Corporation Ltd (ASX: RCG)
|
$483 million | $600 million | Athletic clothing and footwear |
Companies like JB Hi-Fi, RCG and Premier Investments have done a good job of growing their sales and profits recently, but this will become a much tougher task when Amazon arrives in full force.
There is also the possibility of margin contraction as local retailers lower their prices and range more items in an attempt to maintain their market share.
Foolish takeaway
Amazon will need some time to establish its operations in Australia and this means investors don't need to rush out and sell their retail shares immediately.
However, the longer term impact from Amazon is likely to be substantial and investors should take this into account when making a long term investment decision.
