One of the strongest US large cap stocks, AMZN pulled out of the recent market correction and shot up to new highs above $650. Here's an updated weekly chart of this dominant online retailer, which recently came full circle with the opening of its first physical book store.
Meanwhile, traditional brick and mortar retailers like Macy's (M), Fossil (FOSL), and Wal-Mart (WMT) are sinking fast. Even Nordstrom (JWN), a high-end department store with a well-integrated online presence is fading fast in this market. The weakness may spread to other high end retail names like Tiffany and Co. (TIF) and Sotheby's (BID), a trend we highlighted last month in our "Retail and Leisure Stocks Slide" post.
$FOSL Sharp break lower. Down 11 months out of past 12, most prolonged drop since 2008. pic.twitter.com/VImzF7jPZZ— David Shvartsman (@FinanceTrends) November 13, 2015
$WMT Wal-Mart in sharp decline, -32% YTD. Stock has erased gains of prior 4 years. pic.twitter.com/pNMl3Q8O0u— David Shvartsman (@FinanceTrends) November 13, 2015
The recent downturn in retail is also hitting online sellers in US and China.
Take a look at the recent breakdown in VIPS, one of the leading stocks of the past 3 years. From late 2012 to its 2015 high of $30, VIPS registered a 3,000% gain. Today it's down over 25% and down 5% YTD. The uptrend has been broken. A series of lower lows (downtrend) is now in place, as VIPS trades below its weekly moving averages.
$VIPS breaking down, -28% today and -5% YTD. Gained 3,000% from 2012-2015. Even e-tailers get the blues. pic.twitter.com/ONskJhYR9b— David Shvartsman (@FinanceTrends) November 13, 2015
We're seeing a generational shift to increased online shopping and away from "stuff" sold at big box and mall stores. Millennial shoppers still frequent physical stores, but they (and, increasingly, older shoppers) also tend to use stores as a showroom for goods purchased online. The seamless retail experience that younger shoppers demand is currently not available at most major retailers.
From Accenture's report on Millennials:
"...Unfortunately, our research shows that retailers are currently under-delivering when it comes to the demands of Millennials. When Accenture evaluated more than 60 global retailers to understand how seamlessly they deliver the customer experience, we found that most of them had big holes in their approaches.
We have identified six dimensions as contributing to a seamless retail experience. Today, most retailers are making headway on only two: providing a consistent cross-channel experience and offering personalized interactions. The other four—connected shopping, integrated merchandising, flexible fulfillment options, and the capabilities and enriched services that help make the overall shopping experience better, faster and more memorable—remain works in progress."
It's a trend analysts are calling the "Amazon effect".
Nordstrom $JWN, Macy's $M, $JCP all hit by the "Amazon effect". Generational shift to online shopping. $AMZN pic.twitter.com/Bf6wjwQm1L— David Shvartsman (@FinanceTrends) November 13, 2015
We touched on some of these trends last month in our Wal-Mart vs. Amazon post. The bottom line here is that AMZN remains the strong stock while WMT suffers its biggest drop since the 2000 bear market.
You can also go farther back to our fall 2013 post on Amazon, the "21st century Sears" (the stock has climbed 100% since then). Between its dominant position in online retail and the now well-recognized growth of its AWS business, some key investors have been happy to hold on and stick with a winner.
In 2013, Stanley Druckenmiller made a profound comment about Amazon Web Services. He nailed it: https://t.co/9jFoWN88uo $AMZN $IBM— StockTwits (@StockTwits) November 6, 2015
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