Amazon has a new weapon in its war on brick-and-mortar retail (AMZN)
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The environment for brick-and-mortar stores is abysmal.
The rise of e-commerce and titanic shifts in how shoppers spend their money has hit malls and stores hard. Visits to malls declined by 50% between 2010 and 2013, according to the real-estate research firm Cushman & Wakefield.
Amazon in contrast has continued to eat up market share. The company accounted for 53% of onlines sales growth in the US in 2016, according to market research firm Slice Intelligence. In other words, for every new dollar American consumers spent online, Amazon took 53 cents of it.
The offering has been built on speed, ease and cost. And now, according to a note out March 23 by equity analysts at Morgan Stanley, the retail giant has a new weapon in its war against brick-and-mortar retailers: credit cards.
In January the firm renewed its credit card partnership with JPMorgan, and rolled out a new "Prime-only 5% cash back incentive for purchases on Amazon."
"The penetration of Amazon's credit card appears headed higher," the bank said. "13% of people who do not already have an Amazon credit card say they are "very likely" to sign up for either the enhanced Chase card or Synchrony card."
Morgan Stanley said that the firm's new card will drive more consumers to spend their money on Amazon.
"Amazon's new Chase card is expected to drive more spend towards Amazon and away from retailers as 82% of prospective new Amazon card owners plan to shop "more" or "a lot more" on Amazon than they currently do."
The bank has a price target for Amazon of $900 per share, above Amazon's current share price of $849.84.
Their price target for a number of retailers are lower than the current market price. For instance, the bank's price target for Nordstrom Inc. is $38 per share, below its current $42.33 share price. Their price target for Kohl's is $35 per share, below its current $37.42 price.
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