Should Amazon buy Target?
A lot can change in 12 months, but for one analyst a conjecture made around the start of the year still stands as we get ready to ring in 2019 — Amazon.com should acquire Target.
Loup Ventures analyst Gene Munster is still sold on the notion that it would make sense for the e-tail giant to snatch up the brick-and-mortar discounter, as reported on Seeking Alpha. With Amazon’s advantages lying in logistics rather than retail, according to Mr. Munster, the company could benefit strongly from Target’s physical presence and large but not unwieldy footprint.
When Mr. Munster initially discussed the advantages of an acquisition at the beginning of the year, he also cited other factors such as a demographic overlap in the customer base. He pointed to Amazon’s use of Prime to market to female heads of household and the introduction of kid-friendly content to Prime Video as evidence that both Amazon and Target were focused on moms with kids.
The year 2018 has seen plenty of developments for each of the retailers in question.
Target has been going strong with investments in unique private brands, technology and last-mile fulfillment. The chain posted its best quarterly comp sales growth in 13 years during the second quarter. A 6.4 percent gain in customer traffic was the highest increase since the chain first began reporting the number in 2008. The retailer followed its second quarter success with a 5.1 percent gain in comp sales and a 5.3 percent jump in traffic during the third quarter.
Despite the flow of good news, Target has seen its stock price fall 24 percent over the past 90 days leading some beyond Mr. Munster to see it as takeover target.
Amazon, meanwhile has spent the year dominating headlines — some laudatory, others describing perceived weaknesses. For instance, Amazon showed some creative omnichannel thinking with its new brick-and-mortar presence by extending Amazon Prime discounts to Whole Foods customers, but anticipated customer-facing improvements, like the reduction of prices, haven’t not come to fruition.
And even as Amazon has broken new ground with its Just Walk Out technology and made an unprecedented move into retail pharmacy with a bid for PillPack, it has demonstrated some areas of vulnerability, including weakness in women’s apparel (a Target strength).
- Amazon-Target intrigue again – Seeking Alpha
- Should Amazon have Target in its acquisition sights? – RetailWire
- Target hits a bullseye in Q2 – RetailWire
- Target Reports Third Quarter Results – Target Corporation
- Why Target’s stock dropped 15 percent in November – The Motley Fool
- Analyst: Prime perks could eventually double customers at Whole Foods – RetailWire
- Analyst: Whole Foods’ lower price claims are mostly ‘noise’ – RetailWire
- Why aren’t women buying Amazon’s private label clothing? – RetailWire
DISCUSSION QUESTIONS: Is Loup Ventures’ Gene Munster on-point about Target’s potential value to Amazon? Do you see Target’s board being receptive following the progress it has made in recent years?