Amazon Tipped To Buy Target

Amazon Tipped To Buy Target

The analyst is predicting that online shopping giant Amazon.com will make a bid for USA department store Target this year to bolster its retail offering following Amazon's US$13.7 billion acquisition of upmarket grocer Whole Foods in the USA, according to a report today in Bloomberg.

"Target's focus on moms is central to Amazon's approach to win wallet share", he wrote.

The big blow to Amazon would come from a hit to the growth rates after incorporating the large retail sales base of Target into the financials of Amazon. The decision would make a lot of sense, as Target already operates over 1,800 stores and is popular with the mother and family demographic. This deal would likely have to be approved by regulators.

It's easy to think that Amazon is exclusively an online player.

The acquisition of Target, if it happens, would follow Amazon's recent $13.7 billion purchase of Whole Foods.

Among those is Steve Kovach at Business Insider, who predicts, among other things, and China's consumer tech brands will slump with USA consumers, that augmented reality will slide and that, yes, Amazon's continued growth will become a source of concern for competitors and consumers alike.

While Wal-Mart is the biggest player in the USA, capturing 8.3% of total US retail sales (as of 2016), Amazon and Target together capture a smaller 3.9% of this highly fragmented market.

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While the business media generally accepted Munster's arguments and expanded on it with conjectures from editors and various experts, there also was some backlash in the retail community - partly about the soundness of his prediction and partly in response to what is seen primarily as a PR play.

"As for retail stores, Amazon's acquisition of Whole Foods 470 stores along with testing of the Amazon Go retail concept is evidence that Amazon see [s] the future of retail as a combination of mostly online and some offline", he wrote. "However, for any acquisition to work, Target needs to bring something to Amazon that Amazon can not achieve itself".

Kotha also questioned whether this potential deal would change anything in the battle of Amazon vs. Walmart.

The domestic number would dip even further where Amazon is forecasted to hit $105 billion this year and Target is almost the same size at $71 billion.

"I shop on Amazon and I shop at Target, so I don't know", said Gia Tebbs, of Observatory Hill. The only option would be a debt-fueled move similar to Whole Foods.

But it's not at all clear that Amazon and Target agree.

"Investors would view this as Amazon taking over the world and that's a good thing", Munster said in an interview on Bloomberg Radio.

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