The landscape in the retail industry has been changing dramatically with department stores, consumer goods stores and ecommerce all factoring into the sector in different ways.
Department stores have been reporting significantly lower revenue and earnings with decreased guidance for the near term. As a result, nearly all of the top department stores are reporting lower valuations year to date with the exception of JCPenney (JCP, Financial).
In consumer goods, stock losses have been less dramatic as consumer spending improves and the housing market continues to strengthen.
However, a main factor affecting all aspects of the industry is ecommerce. Companies across the sector are finding more and more consumers prefer to shop online and as a result retail strategies are continuously evolving to more directly meet online shopping demand.
Amazon (AMZN, Financial) is one leading factor for the online shopping movement and many companies are focusing their ecommerce strategies to better position themselves against the online retail company.
Amazon’s business overall has been significantly growing. In the company’s first quarter it grew sales across all of its business segments by greater than 20%. Revenue for the quarter was $29.13 billion and earnings per share were $1.07.
On Tuesday, the company announced a new initiative that is expected to add significantly to its international sales. Amazon will be expanding its business operations in India, adding $3 billion to its current investment of $2 billion. The company sees substantial growth opportunities in India’s ecommerce market and is seeking to meet the higher demand. This demand has been increasing as India, the second-most populated country in the world, is reporting leading smartphone sales growth which has increased mobile shopping purchases.
In interviews Wednesday, Amit Agarwal of Amazon and market specialists gave their insights on India and Amazon’s new investment.
I do not own any shares of any stocks included in this article.
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