Ok…here’s a thought. Perhaps Amazon is not the biggest retail story in the history of mankind. Not a logistics call either. Maybe it’s simply the biggest non-asset-based roll up anyone has ever seen. I’ll get a lot of ‘off your rocker, McGough’ pushback on this. But hear me out…
- If brands as high-end as Nike are willing to go AMZN w high-end product (people mis-understand this – it’s NOT going low-end – think FL not KSS/JCP) others across the spectrum, will follow.
- You don’t think so? What if the Amazon UI changes dramatically? As I said in our #retail5.0 deck, why not move to an Alibaba t-mall setup – or innovating past Baba so everyone from NKE to Tiffany are rushing to use AMZN.
- Those brands – even dominant players such as Nike, won’t work on a ‘Futures’ model” where the retailer buys and controls inventory. The Brands will shoulder the $$$/inventory – and will likely ship directly.
- That means operating asset turns skyrocket for AMZN – and it gets growth + increased ROIC/RNOA.
- Here’s another thot…what happens to Google’s ad revenue in this context? Yep…horrible.
But this is ANOTHER reason why I think the biggest consensus call – perhaps ever – that ‘retail is uninvestable’ will end up being wrong.
That is, unless you are BBBY, KSS, TGT, JCP or any retailer that sells commodity product. OR if you are a brand like HBI, RL, UA, TIF etc....that is losing relevance on the margin.
BBBY, case in point, just showed us that if you sell commodity product, you can comp down again, and again and again. AND why you can short these stocks at the bottom w bad sentiment. Remember Winn-Dixie? BBBY still thinks that it can monetize a membership model. #fail. It works for AMZN. Maybe warehouse clubs. RH failed. GNC failed. BBBY will fail.
