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Amazon comes in handy when store closures accelerate, says Goldman Sachs



Nikol Szymul manages a desk at Amazon offices discreetly tucked into a building called Fiona in downtown Seattle, Washington May 11, 2017.

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By the end of this year, 12,000 stores are estimated to be in nearby, and Amazon is going to take advantage, according to an analyst from Goldman Sachs.

The price of store closures is accelerating, and this, along with faster shipping and consumer spending, is driving consumers to spend more of the dollar online, said Goldman analyst Heath Terry.

"With clothing and accessories recording the largest proportion of store closures, we believe Amazon will be a primary beneficiary given that this segment already sees (more than) 20% online penetration," he wrote in a note to clients on Tuesday. He also said companies working to make the purchasing process convenient, such as Amazon's $ 800 million same-day delivery on the same day, will convince more consumers to buy online.

"Clean gaming eCommerce companies like Amazon continue to benefit from greater access to consumer data and purchase history that not only enables compelling consumer experiences, but also provides efficiency and competitive advantage through advertising, product recommendations and dynamic pricing," said Terry.

Store closures can cause consumers to use a service like Stitch Fix, which sends stylist-selected clothing to subscribers, he said. The company has begun to focus on mass market consumers outside of New York and California.

The closures of major retailers have been caused by "slow or declining sales growth, balanced balances and rising occupancy costs," he wrote.

Globally, the e-commerce industry is expected to grow at a compound annual growth rate of 1

8% over the next three years, driven mainly by strength in three regions. In China, the economy still tends to be consumer-led, and top retailers are expanding their wallet share there, especially in low-level cities. In India, online retailing companies have begun to organize supply chains by gathering salespeople and creating delivery and payment infrastructure. In Latin America, e-commerce is expected to grow more than 20%.


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