Working on a home is one of the joys of being a homeowner.
And to do these home improvement projects, one generally has to go to the right stores to get the materials that they need. Despite this, home improvement stores like Home Depot and Lowe’s may be under threat from a newcomer in the field: Amazon.
Lowe’s and Home Depot have long been touted as being “Amazon-proof”, but that fact might not be so certain anymore, analysts believe.
The information comes from a CNBC.com article about the quarterly earnings of Lowe’s, with many investors paying attention to the impact that Amazon had on the retailer. One of the individuals watching the earnings is Boris Schlossberg, the managing director of foreign exchange strategy at BK Asset Management.
The expectation is that Amazon’s e-commerce convenience has negatively impacted home improvement businesses. The online retailer has recently started offering appliances as part of the deal made with Sears earlier in the year.
“Amazon doesn’t have to copy a lot of Lowe’s inventory to be able to steal away some of the low-lying fruit, by simply allowing people to order many of these items online versus in-store. So Wall Street is going to be watching very carefully to see what kind of forward guidance Lowe’s management gives, and whether they are going to admit or acknowledge any type of bleeding effect from Amazon that Home Depot… also sort of alluded to in their call earlier,” Schlossberg said.
And he’s correct in that, as Home Depot shares fell 3% in one week, even as the quarterly earnings beat estimates. There are fears that these companies will suffer further from Amazon’s competition.
“Amazon does not have to really compete on [a] full catalog basis with Lowe’s. They can sell lamps, and furnishings, and all of the fixtures at a much lower cost, with much easier delivery method, and that could really impact Lowe’s bottom line very harshly,” Schlossberg pointed out.
So while the average customer might not go to Amazon to get a window for a window replacement, something that can earn a 73-77% return on investment when a home is sold, they’re definitely turning to it for other improvement needs. Appliances, furniture, and more.
It is uncertain what long-term impact Amazon has had on Lowe’s yet, but the projection is that it’s the same negative trend as Home Depot.
If so, it’s further proof that no retailer is truly Amazon-proof anymore.