Photo: Target
It’s not unusual for organizations of all types to release prediction papers around this time of year. One that has drawn a lot of attention is the prediction by Loup Ventures, a technology venture fund, that Amazon.com will acquire Target before 2018 is complete.
Loup asserts that Target would make an ideal acquisition for Amazon because the two companies focus on the same primary demographic (moms with kids) and because the chain doesn’t operate an unwieldy number of stores.
On the mom front, Loup points to how Amazon has used its Prime program to target promotions to female heads of households. It has also added “kid-friendly content” to Prime Video with the goal of adding to its numbers of annual subscribers.
While Amazon’s acquisition of Whole Foods made clear that it sees a role for brick and mortar stores in its future, the 470 locations it picked up are a tiny fraction of Walmart’s total of nearly 11,700 worldwide. Adding Target to Whole Foods would bring Amazon’s store count to around 2,300.
One potential stumbling block could be Washington politics. President Trump has taken repeated shots at Amazon and Jeff Bezos, its founder and CEO, who owns The Washington Post. Mr. Trump objects to the paper’s coverage of his campaign and administration. Last week, the President tweeted that the U.S. Postal Service was losing billions annually because it charges “Amazon and others so little to deliver their packages, making Amazon richer and the Post Office dumber and poorer? Should be charging MUCH MORE!”
While an Amazon bid for Target would invite scrutiny, Loup doesn’t believe there would be legal grounds to block the deal. The combined companies would still be much smaller than Walmart, which has a 23 percent share of market (including grocery) when you look at the top 18 retailers in the U.S. Amazon and Target combined have about a 13 percent share.
There have been other predictions about potential Amazon targets including Kohl’s, which tested Amazon smart home shops in 10 stores in Chicago and Los Angeles. The department store also accepted returns for Amazon at 82 locations in those markets.