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Revealed: 10 ASX shares that could get crushed by Amazon

Credit: Amazon.com

There has been a lot of speculation about Amazon Inc.’s arrival into Australia and it’s not hard to see why this would have a lot of Australian retailers worried.

Anyone who has looked at the online retailer’s U.S-based website will see quickly that nearly every retail category is pretty well covered.

Although Australian consumers won’t have the full range of categories initially, you can be pretty sure that Amazon will look to expand its range fairly quickly if it can develop a fast and efficient method to ship products across the country.

As a result, I think it is important that investors take some time to understand which Australian retailers might be most exposed to the threat from Amazon.

With that in mind, here are the 10 ASX retailers that I think will be most heavily impacted by the arrival of Amazon:

Company Market Cap Annual Sales Retail Categories/Segments at Risk
Wesfarmers Ltd (ASX:WES)
$49.8 billion $67 billion Supermarket groceries, Target, Kmart, home improvement, Officeworks
Woolworths Limited (ASX: WOW)
$34.3 billion $59 billion Supermarket groceries and household goods, BIG W
Metcash Limited (ASX: MTS) $2.1 billion $13.2 billion Groceries, household goods, home improvement
Harvey Norman Holdings Limited (ASX: HVN) $4.6 billion $7.7 billion Technology and electronics, small home appliances, home décor
JB Hi-Fi Limited (ASX: JBH) $2.8 billion $5.6 billion Fast moving electronics, small home appliances, DVDs, music
Myer Holdings Ltd (ASX: MYR) $912 million $2.8 billion Apparel, homewares, general merchandise
Super Retail Group Ltd (ASX: SUL) $1.9 billion $2.6 billion Sporting equipment, outdoor and leisure goods, auto care
Premier Investments Limited (ASX: PMV) $2.2 billion $1.2 billion Fashion and apparel
Reject Shop Ltd (ASX: TRS) $123 million $850 million Discount consumer goods, homewares
RCG Corporation Ltd (ASX: RCG)
$483 million $600 million  Athletic clothing and footwear

Companies like JB Hi-Fi, RCG and Premier Investments have done a good job of growing their sales and profits recently, but this will become a much tougher task when Amazon arrives in full force.

There is also the possibility of margin contraction as local retailers lower their prices and range more items in an attempt to maintain their market share.

Foolish takeaway

Amazon will need some time to establish its operations in Australia and this means investors don’t need to rush out and sell their retail shares immediately.

However, the longer term impact from Amazon is likely to be substantial and investors should take this into account when making a long term investment decision.

If retail shares aren't for you, then why not consider these Top 3 ASX Blue Chips To Buy In 2017 instead?

For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Premier Investments Limited and Super Retail Group Limited. Motley Fool contributor Christopher Georges owns shares of RCG Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Bruce Jackson.

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