Now Amazon sinks US shopping giants
Rumoured deal with Nike hammers retailers
OnlInE giant Amazon gave US retailers a battering last night as it looked poised to announce a tie-up with the world’s biggest sportswear maker – its third potential takeover in five days.
Traditional bricks-and-mortar sports retailers were left reeling with billions of dollars wiped off them after Goldman Sachs said nike was close to selling directly on Amazon’s website.
US athletics chain Hibbett Sports sank 5pc to its lowest value in more than seven years, while Dick’s Sporting Goods fell 3.8pc.
Shoe seller Foot locker fell 5pc – its lowest level in more than three years.
losses were not limited to the sports retail sector either, as general department store chains were left wondering what effect Amazon’s latest foray into their territory could have.
Sears fell 5.4pc and JC Penney sank 5.7pc.
nike’s sales on Amazon are currently limited to independent dealers on its Marketplace arm and shoe-seller subsidiary website Zappos.
According to Goldman Sachs, nike could build an additional $300m to $500m of revenues in the US by expanding as a wholesale seller on Amazon. This is equivalent to 1pc of its global sales. Goldman said the agreement would be similar to the one Amazon already has with nike’s athletic clothes rival Under Armour, and added that it would also give nike better access to the millennial market, who increasingly prefer to use Amazon for clothes purchases.
In a recent Goldman survey, male millennials named Amazon their favourite retailer in every category but shoes and athletic, where they favoured nike.
‘Taking this step would give nike direct economic exposure to a large and fast-growing distribution channel,’ said Goldman analyst lindsay Drucker Mann. ‘We expect pressures on bricks-and-mortar retail for the foreseeable future to result in pockets of inventory excess.’ nike sat at the top of the Dow Jones following the news, up 2pc, or $1.03, to $52.59, while Amazon rose 1pc, or $9.64, to $1002.23.
Amazon’s potential tie-up with nike is just the latest in a recent assault by the company on traditional retailers across all sectors.
last Friday, supermarket shares across the US and UK dived after Amazon mounted a shock £10.7bn bid for organic retail chain Whole Foods.
It has nine stores in Britain and 460 in total, including in Canada and the US.
The audacious foray into the grocery market sparked a sharp sell-off at rivals, wiping £1.5bn from the value of Tesco, Sainsbury’s and Marks & Spencer as traders feared the internet giant was about to plough billions of pounds into the industry.
likewise, on Monday the retail giant announced another line of attack against major chains by launching a fashion business called Wardrobe, which will allow customers to try on clothes for free at home.
The UK staff of the grocer being taken over by Amazon say they have been kept in the dark about job security.
Staff at US firm Whole Foods say they have not received any official communication about their status since the £10.7bn deal was announced last week.
Questions are being raised about how Amazon’s ownership may lead to job and wage cuts, given the online giant’s interest in using in-store technology to ramp up automation.
Whole Foods did not respond to requests for comment, but an Amazon spokesman said no job cuts are planned.