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Strategy 8 'Amazon-proof' businesses that are defying the retail apocalypse (AMZN)

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Investors think that businesses like Walgreens, AT&T, Ikea, and Home Depot won't be threatened by Amazon anytime soon.

Despite its considerable resources, Amazon may have trouble breaking into some industries. play

Despite its considerable resources, Amazon may have trouble breaking into some industries.

(Brendan McDermid/Reuters)

  • Amazon's enormous ambitions have led it to expand from online retail into film and television production, advertising, and cloud computing, among other industries.
  • While it may seem that no business is safe from Amazon, a 2017 investor survey from Morgan Stanley Research indicated that some industries may not be threatened by Amazon in the near future.
  • Those industries include auto parts, beauty, and home improvement.


It's no secret that Amazon is a major threat to many businesses.

From its humble origins as an online bookseller, Amazon has expanded its business into groceries, streaming, cloud computing, advertising, and film and television production, to name a few. In the wake of reports that the company will start a package-delivery service to compete with UPS and FedEx, it may seem that no business is safe from Amazon.

That may not be true, according to a 2017 investor survey from Morgan Stanley Research. Investors indicated that these eight industries are the least likely to be threatened by Amazon anytime soon.

Dollar stores

Dollar Tree play

Dollar Tree

(Joe Raedle/Getty Images)

Shoppers at dollar stores care about price and location more than anything else. While Amazon is making efforts to improve shipping speeds from its warehouses and from its third-party suppliers, it can't beat the prices that dollar stores offer. And at $99 each year, Prime is not feasible for those on a tight budget.



Auto parts

AutoZone play

AutoZone

(Pat Wortwick/AP)

Though Amazon can deliver auto parts quickly and affordably, they don't have the connections to dealerships that auto part companies like AutoZone have. Auto part shoppers also prefer the expertise provided by dedicated auto part retailers, which Amazon can't match.



Home furnishings

Ikea play

Ikea

(Hollis Johnson)

While some home shoppers are willing to buy furniture online without seeing it in person, others prefer home furnishing stores that allow them to get a better sense of how a couch or dresser might look in their home.

Amazon added an augmented-reality feature to its iOS app in 2017 to address this problem, but it may not be enough.



Beauty

Sephora play

Sephora

(Getty Images/Greg Barritt)

Like home-furnishing retailers, beauty companies like Sephora have the advantage of brick-and-mortar locations where customers can try different products before choosing their favorite. They can also offer advice on which products might be best for a given customer.



Food Retail

Kroger play

Kroger

(AP Images / LM Otero)

This response is surprising given Amazon's recent acquisition of Whole Foods, but some investors think it may take Amazon longer to dominate the food retail industry than it hopes. Whole Foods' high prices have long been a drawback for more budget-conscious shoppers, a problem that Amazon's recent price-cutting efforts may not be able to solve.



Consumer staples

Walgreens play

Walgreens

(Thomson Reuters)

When it comes to buying everyday household products, consumers often don't plan ahead, waiting until they run out of toothpaste or paper towels before buying more. This means that they often need to buy household products immediately and will choose the nearest available store where they can do so.



Media/Cable/Telecommunications

AT&T play

AT&T

(Paul Sakuma/AP)

The infrastructure needed to run a successful phone, cable, or internet service company would make a potential investment into telecommunications difficult, even for a company with Amazon's vast resources.



Home improvement

Home Depot play

Home Depot

(Joe Raedle/Getty)

When homeowners need to repair, paint, or remodel their homes, being able to consult with an expert without paying a contractor's steep fees is an attractive option. For those who prefer help for this kind of project, major home improvement companies like Home Depot provide the brand-name reliability that individual contractors can't match. Amazon attempted to take over the home improvement industry with Amazon Local Services (which was later renamed Amazon Home Services), but it never took off.



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