Amazon Teams Up With Monoprix, Bolsters Presence In Europe

Amazon.com, Inc. (NASDAQ:AMZN) recently teamed up with France-based Monoprix, a French retail chain and a subsidiary of Casino Group which has a significant market hold in the retail and global food distribution market in France.

The partnership will allow Amazon to offer food products and other grocery items of Monoprix on its platform via Prime Now app to prime customers in Paris and other suburbs from this year. Hence, the deal is likely to bring in more prime membership to the platform from this region and improve the top line.

Reportedly, Monoprix operates 800 stores in total, including 300 stores in France and 85 in international markets. It generated $5-billion revenues last year. The retail chain makes around 3 million deliveries per year in more than 150 towns and cities across France.

We believe the deal will help Amazon’s grocery business to expand globally, particularly in European Union.

Expanding Grocery Business

Amazon’s focus on grocery business is driving growth in several regions. Amazon started its grocery and food retail business with Amazon Pantry and achieved success by acquiring Whole Foods Market (NASDAQ:WFM) last year.

We believe that Amazon’s focus toward grocery business will help the company gain momentum in the growing online grocery market. According to a report by Technavio, the global online grocery market is expected to grow at a CAGR of 20% between 2017 and 2021.

Coming to the price performance, the shares of Amazon have returned 81.8% over a year, outperforming the industry’s rally of 62.3%.

Strong Focus on European Market

Coming to Amazon’s focus in European region, after the Whole Foods acquisition, the company is aiming at strengthening its hold on grocery market in Europe, with France being the prime target.

Reportedly, the company has been also trying to acquire Leclerc and Carrefour (PA:CARR), the two big food retailer and grocer of France.

With this new alliance the company thrives to expand its online grocery business not only in France but also in Europe. Reportedly, Amazon witnessed 54% and 56% of year-over-year growth in its grocery sales in Germany and United Kingdom, last year.

Moreover, per the latest report of a research and training firm, IGD, the grocery retail market in Europe is expected to grow 3.8% every year till 2022. According to data from Statista, Europe contributed 32.9% of the global online grocery sales in 2017 with France contributing 5.6%, the second highest after 7.5% contributed by U.K.

Further, this partnership improves the competitive position of Amazon against Walmart (NYSE:WMT) in Europe. This will company again market share in the region.

Zacks Rank & Stocks to Consider

Currently, Amazon carries a Zacks Rank #3 (Hold).

Investors interested in the broader retail-wholesale sector can consider Stamps.com (NASDAQ:STMP) and PetMed Express (NASDAQ:PETS) . While Stamps.com sports a Zacks Rank #1 (Strong Buy), PetMed Express carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Stamps.com and PetMed Express is currently pegged at 15% and 10%, respectively.

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