The retail sector isn’t spared from the sharp market sell-off today. But Amazon.com will give them something extra to sweat about as it prepares a major assault on the industry.
The S&P/ASX 200 Index (Index:^AXJO) tumbled 1.5% in late morning trade as fears of a second spike in COVID-19 cases dragged on sentiment.
Most consumer discretionary shares on the ASX fell in sympathy and news that Amazon.com is looking to aggressively expand in Australia is adding pressure.
Aggressive expansion
The US online shopping giant is planning on setting up one of the nation’s biggest warehouses in Western Sydney and searching for a mega facility in Melbourne, according to the Australian Financial Review.
Amazon.com is undoubtedly capitalising on the big shift to online shopping brought on by the coronavirus lockdown.
While Amazon’s entry into Australia three years ago hasn’t posed much of a threat to local retailers, at least not in my opinion, this may be about to change.
Good time to attack
There’s also no better time to go on the offence when the sector is getting hit by the economic fallout from the pandemic.
The AFR reports that Amazon will occupy a 190,000 square meter multi-level fulfilment centre at Goodman Group’s (ASX: GMG) Oakdale West Estate in Kemps Creek.
Amazon is also said to be hunting for additional warehouse space up to 80,000 square meters in Melbourne.
It was only two weeks ago that Amazon announced plans for a new warehouse in Brisbane on another site owned by Goodman.
What’s also noteworthy is that Amazon’s 2019 sales nearly doubled to $562 million in 2019 from $292 million the year before, and the AFR believes 2020 will be an even bigger year.
The ASX stocks also benefiting from COVID-19
But it isn’t only Amazon that’s benefitting from the big shift to online shopping. Our home-grown mini-Amazon Kogan.com Ltd (ASX: KGN) is also reaping the spoils from the crisis.
There’s a host of other retailers that are similarly benefitting from the structural change. The Redbubble Ltd (ASX: RBL) share price surged nearly 30% after reporting a jump in online sales for its print-on-demand products.
The Accent Group Ltd (ASX: AX1) share price is another noteworthy outperformer today. Shares in the footwear retailer jumped 10% on the back of a positive trading update.
Others in the sector that have benefitted from the stay-at-home thematic include Bunnings and Officeworks owner Wesfarmers Ltd (ASX: WES).
Let’s also not forget electronics and furniture retailer Harvey Norman Holdings Limited (ASX: HVN) and kitchen appliance maker Breville Group Ltd (ASX: BRG).
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Motley Fool contributor Brendon Lau owns shares of Breville Group Ltd. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Accent Group and REDBUBBLE FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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