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A major expansion by Amazon.com ( AMZN ) into private-label goods, which could come this month, elevates its ability to further challenge legacy retailers across the board. Cowen analyst John Blackledge estimates Amazon will be the No. 2 player in the $425 billion consumable market, excluding food and beverage, surpassing Walgreens Boots Alliance ( WBA ), CVS Health ( CVS ) and Target ( TGT ) but still lagging well behind market leader Wal-Mart ( WMT ). He defines consumables as four segments: personal care products, household products, baby products and pet products. Blackledge also estimates Amazon will be a top-10 player in the $785 billion food and beverage grocery market by 2019. “We are encouraged by Amazon’s growing footprint in this category, which we see as ripe for potential disruption, given younger demos increasingly purchasing grocery items via digital channels,” Blackledge wrote. The leader in the food and beverage category is Wal-Mart, followed by Kroger ( KR ), Albertsons/Safeway and Costco Wholesale ( COST ). Last week, the Wall Street Journal cited people familiar with the matter as saying Amazon is set in the coming weeks to roll out new lines of private-label brands that will include its first broad push into perishable foods. According to the Private Label Manufacturers Association, sales of private-label store brands in the U.S. topped $118 billion in 2015, with supermarkets and drug chains accounting for over $70 billion of the total. In the grocery and consumables market, Blackledge says, Amazon’s growth has come at the expense of Wal-Mart, Target. Walgreens and CVS. Amazon’s key competitive advantage is its multiplatform approach with Amazon Prime, which includes same-day delivery for many goods, “all of which should lead to rising number of consumers skipping the trip to the local supercenter, drug store or grocery market,” he wrote. Amazon has sold private-label products since 2009, primarily under the AmazonBasics brand, though that effort has concentrated largely on consumer electronics. Amazon stock rose 0.6% to 702.80 in the stock market today . Amazon stock hit an all-time high of 722.45 on May 12. It carries a strong IBD Composite Rating of 94, putting it among the top 6% of all stocks on key metrics such as revenue growth. Walgreens climbed 1.3% but CVS fell 1.5%. Target climbed 2.4%. Wal-Mart advanced 1%, hitting a nine-month high intraday, after spiking nearly 10% Thursday on strong earnings and same-store sales. Scalper1 News
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