'Sooner, faster, now' - the companies surfing the
e-commerce wave
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[February 23, 2018]
By Alasdair Pal
LONDON (Reuters) - Amazon's <AMZN.O>
assault on the retail industry has brought misery to traditional
retailers without a strong web presence.
Less well noticed is the patchwork of European companies that are
turning the e-commerce revolution to their advantage, supplying online
giants with everything from forklift trucks and storage space to
cardboard boxes and automated warehouses.
Mainly bricks-and-mortar retailers such as Debenhams <DEB.L>, H&M <HMb.ST>
and Marks & Spencer <MKS.L> have faced a torrid few years as stretched
consumers increasingly look online for bargains.
Online retail sales are growing at double-digit percentage rates in
every western European country, according to consultancy the Centre for
Retail Research.
In Britain, a fifth of transactions are now conducted online, a
five-fold increase over the last decade.
(GRAPHIC - Online retail continues to grow:
http://reut.rs/2EV2LiN)

The world's dominant online retailer Amazon <AMZN.O>, whose shares have
soared 73 percent in the last year, is outside the remit of most
European investors because it is U.S. listed, so they have had to look
for other ways of buying into the trend.
One is investing in companies that have benefited from the rise of
e-commerce.
On Feb. 16, warehouse owner Segro’s <SGRO.L> shares hit a decade-high
after it said space-hungry clients, many in online retail and logistics,
continued to buy up storage.
“There is a bull market in impatience,” said Gary Paulin, head of global
equities at broker Northern Trust. “Consumers want things sooner,
faster, now.”
He advises clients to buy shares in Kion <KGX.DE>, a German forklift
truck-maker that is automating warehouses for online retailers, speeding
up deliveries in the process.
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Pedestrians walk past a
Marks & Spencer store on the Champs Elysees avenue in Paris, France,
November 8, 2016. REUTERS/Philippe Wojazer/File Photo

He also flagged a turnaround at online supermarket Ocado <OCDO.L>. The
company has long been targeted by short-sellers betting its share price
will fall, but recently it has signed tie-ups with food retailers Casino
and Sobeys, and its shares have more-than-doubled since November.
Martin Todd, a fund manager at Hermes Investment Management, owns shares
in Kion as well as DS Smith <SMDS.L>, a cardboard-box maker which
supplies Amazon as well as a number of other online retailers.
DS Smith is developing technology to custom-make boxes for Amazon that
will help reduce large gaps in packages that increase freight costs.
“You might think it is a pretty unsexy business ... (but) it is getting
more high tech in what is traditionally a very low tech industry,” Todd
said.
The company recently entered Britain's blue-chip FTSE 100 <.FTSE> index
for the first time.
Buying some stocks exposed to online retail does not come cheap. Ocado
shares are currently trading at more than 800 times forecast earnings,
according to Eikon data.
John Bennett, head of European equities at Janus Henderson Investors,
said that while traditional retailers were “absolutely dying”, stocks
such as Kion were too expensive for him to own.
“It became a very popular name, and I tend to shy away (from
widely-owned companies),” he said. “I am far too curmudgeonly on the
multiples you pay.”
(Reporting by Alasdair Pal; Editing by Tom Pfeiffer and Mark Potter)
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