20140801-高盛-e-Commerce_ascendant_and_transcendent__implications_for_retail_37页_461kb

e-Commerce Ascendant and Transcendent: Implications for Retail

Core Content Summary

The report discusses the growing impact of e-commerce on the retail sector, highlighting that its effects are more extensive than previously thought. It introduces the concept of an inverted pyramid of e-commerce impacts, where the most immediate and significant effects are felt through price transparency, followed by the cost of omnichannel capabilities, and finally market share challenges.

E-commerce is not only a threat but also a transformative force, affecting both stock market performance and financial margins of retailers. The report emphasizes that the rise of e-commerce is disruptive for all retailers, not just those under pressure from Amazon, and that the implications are complex and multi-layered.

Main Points

1. Inverted Pyramid of E-Commerce Impacts

• Price Transparency is the first and most impactful layer, affecting all retailers.
  • It pressures margins across the enterprise.
  • Smaller operators may depress clearing prices.
  • Amazon has an advantage with Prime membership and low working capital.
• Omnichannel Investment is the second layer, requiring significant capital and effort.
  • This investment is often dilutive for traditional retailers.
  • Companies that have invested early and heavily, such as DSW and Nordstrom, are better positioned.
• Market Share Challenges are the final layer, affecting only those retailers who fail to adapt and attract new business.

2. Hidden Costs of E-Commerce

• Traffic trends are under pressure as consumers consolidate shopping trips online.
• Impulse buying is at risk due to fewer in-store visits.
• Retailers are sharpening pricing across their product baskets, which affects sales and margins for non-commoditized products.

3. Financial Implications

• Gross margins have declined since peaking in 2010.
• EBIT margins declined in 2013 after a plateau in 2010-2012.
• Expense pressure is a growing factor, especially from omnichannel investments.

4. Best-Positioned vs. E-Commerce-Challenged Companies

• Best-Positioned Players:
  • Pure-play online leaders: AMZN, EBAY, ZU, SFLY.
  • Brands that control distribution: CRI, NKE, RL.
  • Companies using stores as showrooms: LL, RH, WSM.
  • Early investors: DSW, JWN.
• E-Commerce-Challenged Players:
  • Companies facing greatest risk: BBBY, GCO, KSS, PLCE.
  • Issues include underinvestment in e-commerce, reliance on physical stores, and vulnerability to disintermediation.

Key Information

• E-commerce Trajectory: It continues to grow rapidly and is expected to persist.
• US E-commerce Penetration:
  • The US has the highest e-commerce penetration among major markets.
  • E-commerce share of "core" retail sales increases significantly in the fourth quarter, when consumers spend the most.
• Sector Analysis:
  • Branded apparel is better positioned to benefit from e-commerce.
  • Durable goods are more vulnerable due to price transparency and Amazon's focus.
  • Consumables have seen little cannibalization so far.
• Stock Market Impact:
  • Retail stocks have underperformed compared to the market.
  • Only 27% of covered retailers are trading within 10% of their five-year highs.
  • The Online Suitability Index helps identify sectors better suited for e-commerce, with branded businesses performing best.
  • E-commerce beneficiaries include companies like Carter's, DSW, Nike, and Ralph Lauren.
  • E-commerce challenged companies include Bed Bath & Beyond, Genesco, JC Penney, and Kohl's.

Exhibit Highlights

• Exhibit 1: Inverted pyramid of e-commerce impacts.
• Exhibit 2: Online Suitability Index for retail sectors, showing branded businesses as the most suitable.
• Exhibit 3: E-commerce penetration in the US and other markets, showing consistent growth.
• Exhibit 4: E-commerce as a % of "core" retail sales, with significant increases in the fourth quarter.
• Exhibit 5: Retail stock performance relative to the S&P 500, showing underperformance for most retailers.
• Exhibit 6: Stock market performance by e-commerce exposure, with higher exposure correlated with better performance.

Conclusion

The report concludes that while e-commerce presents challenges for many retailers, it also offers opportunities for those that adapt effectively. The best-positioned companies are those that have invested in omnichannel capabilities, control distribution, and leverage their brand strength. The worst-performing companies are those that have underinvested or are overly reliant on physical stores. Overall, the trajectory of e-commerce suggests it will continue to reshape the retail landscape in the coming years.