Groceries. Restaurant delivery. Small business lending. These are just a few of the areas Amazon (AMZN - Get Report) has expanded into in recent months, as the technology giant touches every facet of our lives.
But what's convenient for consumers (and shareholders), has had an enormous impact and provided untold amounts of collateral damage on its competitors, both physical and virtual alike.
But not every area of retail will experience "the Amazon effect" in the next few years, say experts.
"Even though we own Amazon, we're value investors," said Trip Miller, managing partner at Gullane Capital Partners. "But as value investors, we look at investments through the lens of Warren Buffett and Charlie Munger -- would they own it and is Amazon going to kill it? We think there are opportunities out there that are Amazon-resistant."
Areas like small convenience stores, freight and logistics and buying a car are still largely Amazon-proof, with companies like Dollar General (DG - Get Report) , FedEx (FDX - Get Report) and Penske Automotive Group (PAG - Get Report) warranting mention.
Internet proof retail
"With Amazon buying Whole Foods (WFM) , there aren't many Whole Foods near a Dollar General," Miller said in an interview. "What we look at is that Dollar General is still on a massive organic growth tear, so there's a lot of opportunity for them."
The company has said that is targeting roughly 20,000 stores, with more than 1,200 being opened this year. It's also working on a new store concept, known as DGX (for now, the company has two test stores in Tennessee and North Carolina), which caters toward more fresh food and convenience-store type customers, in the same vein as Wawa, QuickChek or Sheetz.
Roughly 70% of Dollar General's customers live within a 3-mile radius of its stores, making last-mile delivery (shipping from a warehouse to a customer) less of an issue than it is for some retailers, especially those who also sell online.
Though traditional dollar stores tend to focus on physical retail, there is some concern that start-ups such as Hollar -- which has taken the dollar store model and put it online -- will eventually impact Dollar General, as these consumers become more aware of other choices.
Miller dismissed this as a threat, noting the average dollar store customer is "a less tech savvy customer," either because of limited broadband in their area or a lack of awareness. Some 50% of Dollar General's revenue comes from perishable items, such as eggs or milk, so Miller believes it's less likely to go online then some other purchases are.
For their part, most dollar stores have a limited assortment of products they sell online. A look at Dollar General's website includes items like toys, apparel and dry food, but nothing perishable.
The company has also been a good steward of capital, aggressively repurchasing shares over the past five years and openin stores in areas that are underserved. "They're more concerned about being a great value as opposed to having variable pricing, like a Kroger's (KR - Get Report) , which is important," Miller said.
Personal incomes have started to tick up, with the most recent figures showing a 0.4% increase in May, according to the Bureau of Economic Analysis. Consumer spending makes up a significant chunk of the U.S. economy (70% when you include health care spending), an important fact when you consider Dollar General's core demographic is mostly lower income consumers.
Despite worries from some other retailers, Morgan Stanley analyst Vincent Sinisi noted the company's management "feels good about consumer health and the spending outlook."
Most car dealerships are still family owned, leading to little consolidation and ripe for disruption. However, thanks to strong management, Penske Automotive is one of the ten largest auto retailers in the world, with nearly 400 dealerships and room for more.
"We think Penske has the potential to trade above $60 a share next year based on increased earnings, a higher multiple and opportunistic acquisitions in the fragmented dealer space," Miller said. In 2017, Penske shares have fallen nearly 20% this year, on concerns U.S. car sales might have peaked.
In addition to Penske's dealership network, which largely sells high-end cars like Maseratis, Jaguars and BMWs, it also has exposure to the moving business, which is a back-door play on millennials, who often spend money on experiences rather than things, Miller said.
As autonomous cars begin to make their way into the world, there is a real threat that car sales have peaked, as customers will forgo owning a car and just use one that's available, similar to riding a bus or train. Miller, however, doesn't see that as being a threat any time soon.
"It's a situation where the penetration rate in a rural setting is going to be single digits over the next ten years and maybe 15% to 20% of all vehicles," Miller added. "While Google, Apple and maybe Amazon are testing work in this space, the adoption rate is going to be much slower than people are thinking. In ten years, 95% of people will still be driving a car."
In addition to Amazon's drone initiative, the Jeff Bezos-led company has been aggressively expanding its own fleet of trucks, leasing planes and even looking to Uber and Lyft to help with its logistics business. While some may see this as a threat to UPS (UPS - Get Report) or FedEX, it's just the opposite, Miller said.
"FedEx is going through a transitional period as they integrate the TNT acquisition, causing them to spend money building out existing distribution facilities and hubs domestically," Miller said. "There is a lot of long-term value in the TNT integration and FedEx will continue to remain a critical shipping partner for Amazon, especially time sensitive Prime customers."
Led by CEO Fred Smith, the company operates in a duopoly, along with UPS. With the TNT acquisition, FedEx will have several advantages, both in scale and in coverage area, making it even more attractive, said Oppenheimer analyst Scott Schneeberger.
"We anticipate [fiscal 2018] will provide a favorable initial indication of the combined FedEx Express/TNT Express entity, which was recently guided to deliver $1.2-$1.5 [billion] of incremental operating income over FY18- FY20," Schneeberger wrote in an analyst note.
Amazon is less than 3% of FedEx's business, so Miller believes that the loss of Amazon's business would have less of an effect on it than some in the marketplace believe. It also has spent years investing in technology, as well as building out its Asia business, out-investing UPS.
Miller believes that Amazon is "taking off the pressure off" of its network, avoiding situations like during the 2015 holiday season when many of its customers did not receive their packages in time, and not going for a full replacement.
"We see what Amazon is doing as a way to negotiate," Miller said. "They want to build out the whole logistical distribution and get shipping costs down, since it would benefit them if they could pull it off. But if you look at the history of FedEx and UPS, it's a 40 year plan to do it -- Amazon is going to be dependent on third-party distributors for a long time."
Amazon's shares fell 0.6% to $965.80 by Thursday's close.
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