* Amazon.ca to offer sporting goods, outdoor equipment
* Could take small market share from retailers
* Retailers could face pricing pressure, tighter margins
By Solarina Ho
TORONTO, Nov 8 Amazon.com's (AMZN.O) Canadian
site has added skates, snowboards and outdoor gear to its
traditional line up of books, music and DVDs, posing a small
but perhaps growing threat to retailers like Canadian Tire
(CTC.TO) and Forzani Group FGL.TO.
Analysts say the Canadian market is small for the online
retailing giant -- only about 5 percent of revenue compared to
50 percent from the U.S. division.
But they do not dismiss Canada's role.
"(Canada's) still a critically important market where, just
like across the globe, it benefits (Amazon) to expand their
product offering," said Frederick Moran, an analyst at The
Benchmark Co. "Amazon is definitely in a reinvestment mode now
to gear up for the economic expansion."
Longer term, Amazon.ca, which also offers electronics,
watches, and home and garden products, could become a thorn for
some Canadian retailers.
Shares of the online retailer, which soared over 145
percent in 2009, have risen about 28 percent so far this year.
After seeing a 30 percent rise in 2009, Canadian Tire
shares have only risen modestly this year, up about 4 percent.
It sells everything from paint and tools to sporting goods and
Forzani's shares have fared better, rising about 13 percent
this year. But that falls well short of the roughly 98 percent
spike the sporting goods retailer enjoyed in 2009. Forzani owns
SportCheck and National Sports, among others.
Analysts expect impact to be limited for now, but they said
acknowledged that Amazon's competitive pricing and shipping
costs could force Canadian retailers to cut prices more
aggressively, squeezing margins and hitting market share.
Lingering distrust of online shopping is a factor, but
analysts also described sports equipment as "touch and feel"
purchases. Saving a few dollars may not be enough for customers
to buy online after they test equipment in a store.
"Can they take some customers away from a Canadian Tire or
Forzani group? They probably will and you would expect some of
that," said Edward Jones analyst Brian Yarbrough, citing U.S.
trends. He did not expect to see a huge exodus.
Yarbrough said Amazon could take a 1 to 5 percent market
share, but anything higher was unrealistic.
Moran said products found on Amazon.com -- which has made
moves into the territory of traditional retailers and digital
media -- will likely be on Amazon.ca eventually.
For now, the offerings are limited, although the company
plans to continue expanding its product selection.
"Where does this eventually push out to with Amazon?" said
Mackie Research Capital's Robert Cavallo, noting the impact of
more direct competition could get "a little bit dicey."
"At this point, I just don't see this being a major
detractor from the traditional brick-and-mortar."
(Editing by Janet Guttsman)