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Amazon Has 'Long Runway' in Apparel: Wells Fargo
By: Investopedia | March 16, 2018

Amazon.com Inc. (AMZN) is poised to continue taking the retail sector by storm, according to one Wall Street analyst, who described the clothing and accessories space as a "long runway" for the e-commerce giant.

Wells Fargo came to this conclusion after quizzing consumers about their spending habits. From its survey, 85 percent of respondents claimed to use Amazon, yet 76 percent of this same group added that they currently do less than 40 per cent of their shopping on its website. In a research note, reported on by CNBC, Ken Sena said these findings indicate that there are still plenty of opportunities for the company to squeeze higher sales from its existing users. The analyst reacted by increasing his price target on Amazon’s stock to $1,755 from $1,700, implying 10 percent upside from Wednesday's closing price.

Sena remains bullish on Amazon’s prospects, despite growing signs that traditional brick-and-mortar retailers, Walmart Inc. (WMT
WMT) and Target Corp. (TGT), are winning back customers. Both companies have responded to rising competition from Amazon by investing more in their businesses. According to Wells Fargo’s survey, those measures appear to be working. (See also: Walmart to Expand Online Grocery Delivery to 100 Metros.)

"The number that selected Amazon as a preferred shopping destination is significantly lower when compared to results from a year ago," said Sena. "Even accounting for a margin of error, it could reflect the momentum seen at Target and Walmart in the last 12 months."

Rather than worry that Amazon is losing some of the market share it stole from rivals in previous years, Sena delivered a confident outlook, stressing that the e-commerce giant is well equipped to handle stronger competition. "We found a meaningful ramp in year-over-year responses from customers stating that they use Amazon for purchases in apparel, auto parts and sporting goods — all of which is not ideal for our traditional retail space," the analyst wrote, describing the clothing and accessories space as a "long runway" for the company.

Sena noted that Amazon is likely to deliver on its "hard push" into fashion, particularly as a growing number of clothing retailers with larger wholesale businesses are keen to team up with the company. (See also: Walmart Doubles Down on Fashion.)

"Amazon is not just one more channel to sell product through. Some retailers are testing partnerships with the company in more creative ways — for example, Nike recently announced a pilot launch in which they began shipping select style directly to Amazon," he said. "The behemoth site is clearly a threat to almost all retail companies, and each one seems to be taking a different approach."

https://www.investopedia.com/news/amazon-has-long-runway-apparel-wells-fargo/?partner=YahooSA&yptr=yahoo

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