Amazon’s Moves Directly Affecting Brick and Mortar Companies

In yet another sign of Amazon’s strength and impact on cities, a recent article tracked the way moves by the company had direct effects on other companies’ stocks. When Amazon announced the purchase of Whole Foods, Kroger and Target lost value (10-20% of their value) with a second drop happening a few months later as Amazon announced it would be lowering prices in their Whole Foods stores.

This type of impact on competitors’ stock prices happened most dramatically when Amazon announced it was considering getting into the prescription business. At that point CVS and Walgreens, the two largest pharmacy chains in the country, dropped a whopping 30+% over the next few weeks.

This trend was repeated with auto parts, delivery, and prepared food companies as Amazon announced moves that were viewed as competition for these industries.

The takeaway for our purposes is not so much a focus on the stock price, but on the notion that the stock prices are reflecting a perceived market shift away from these brick and mortar companies and towards the online retailer. For cities this translates to store closings and increases in direct deliveries and warehousing. The trend we have seen the last year, with more than 6,500 store closings – the highest ever in the US, will most probably continue into 2018. Certainly something for all of us to be paying attention to and preparing for.