Amazon’s Impact on Small Business Will Be Significant, According to New Study

Amazon’s impact on the small business sector could be greater than previously imagined, according to a new report from credit rating agency Moody’s Investors Service.

Charlie O’Shea, Moody’s lead retail analyst and author of the report, wrote, “Virtually every sub-segment of retail, other than auto retail and pharmacy, are caught in the crosshairs of Amazon’s constantly morphing online presence.” 

The consolidation currently happening in big retail will put the hurt on smaller competitors, added O’Shea, citing J.Crew, GNC and Abercrombie & Fitch (three retailers that have faced financial free-fall in recent years), as examples.

The report advised small apparel and fashion retailers to take a wider view of their competitors, which exist online but also within department stores and big-box retail locations.

Companies already in trouble will have a hard time turning things around, wrote O’Shea: “Distressed retailers have very little room to maneuver in a falling sales environment. Any drop in revenue could be the tipping point for those scrambling to maintain enough liquidity to meet upcoming debt maturities and, at the same time, enough money to support a competitive online capability….Competitors going up against mega-retailers such as Walmart or Amazon face a Darwinian choice: fight a price battle with these retail leaders, which they will likely lose, or find someone weaker from whom they can grab market share.”

Amazon and Walmart generated a combined $5.4 billion in retail revenue growth year over year in the first quarter of 2017, according to the report—more than the combined revenue of Moody’s list of most-imperiled major apparel and fashion retailers (which includes Nine West, Claire’s Store, David’s Bridal and Charming Charlie).

(Image courtesy of Integrity Payment Systems)

JCK Magazine Editor