Visualization of retail creative destruction

Jeff Desjardins poses the following question in this report: “What has more value: all major publicly traded department stores in the United States, or Amazon?” The answer is Amazon. In the words of Mr Desjardins: “Add together the market caps of Walmart, Target, Best Buy, Nordstrom, Kohl’s, JCPenney, Sears, and Macy’s, and they amount to a significant $297.8 billion. However, it’s not enough to beat the Amazon machine. The online retailer alone is worth $356 billion, making it one of the largest companies by market capitalization in the world.”

Also, what a difference ten years make: “Ten years ago, the future of brick and mortar retail sill looked bright. The aforementioned retailers were worth a collective $400 billion, and Amazon was only valued at $17.5 billion.”

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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4 Responses to Visualization of retail creative destruction

  1. CHC says:

    But it has been argued that Amazon is over-valued in terms of market-cap (which is the price of a share of its stock x the number of outstanding shares). The current share-price/profits-per-share ratio (P/E) for Amazon is over 200, compared to a P/E ratio of 20 or less for most U.S. companies, including Apple. Not taking anything anyway from Amazon’s business model, but is Amazon REALLY worth 10x Walmart? One could make a great argument for 2x or 3x but unlike Sears and Penneys, I don’t think Walmart is going under anytime soon.

  2. CHC says:

    The point I meant to make is that Walmart’s P/E is about 18-19. So for every dollar of profits, Amazon shareholders (at 200 P/E) are paying more than 10x what Walmart sharefholders pay. To me this seems like tulip mania.

    • Perhaps owning Amazon stock is more like buying an expensive article of fashion (e.g. an Hermes scarf), while Walmart stock is more like a cheapo brand. The cheapo brand is the better value, but the fancy brand signals taste and exclusivity.

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