In the ever changing world of retail, picking and choosing those companies which are not only expected to survive, but thrive, in the face of an e-commerce revolution is a difficult task. With e-commerce juggernauts such as Amazon.com, Inc. (NASDAQ:AMZN) driving e-commerce sales to all-time highs every year, investors ought to make very clear decisions about which retailers to invest in moving forward, as the lion's share of growth will very clearly reside in the e-commerce space, leaving traditional bricks and mortar retail behind.
For companies like Target Corporation(NYSE:TGT), with a vast bricks and mortar footprint (thousands of stores worldwide), one might be inclined to look at some of the progress the company has made in the online space and determine that this company may be a worthwhile investment after all.
Besides, other bricks and mortar companies like Walmart Inc. (NYSE:WMT) have done quite well, growing e-commerce and bricks and mortar sales substantially, boosted by a recovering U.S. economy and increased consumer confidence in recent years.
The fact remains that while Target is growing its e-commerce offerings, profit margins have narrowed, and the long-term prognosis for Target remains uncertain in a space which may be consolidated further in the future.
I would avoid companies like Target which have little in the way of a durable competitive advantage (in my opinion) for those with long-term time horizons, until an entry price arises which is too good to ignore - at some price, every company is a buy.
Invest wisely, my friends.
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