It’s the question that everybody’s asking…and that only one person on the planet has the answer to: What physical retailer will Amazon buy next?
Notice the question is not if, it’s only a matter of who.
Following its purchase of Whole Foods last year, the expansion of its book store program and the roll-out of Amazon Go convenience stores, it’s quite clear that the company understands it needs physical store locations to continue to grow and expand its ongoing takeover of retailing as we know it.
One could almost call it relentless…but that would be too obvious. Relentless.com was one of the original working names Jeff Bezos considered for his nascent business way back when — and in fact if you still type in that web address it will take you to the Amazon home page.
Bezos is the one who will be deciding Amazon’s next moves into physical retailing and if you believe everything you hear about him, he already knows what he’s going to do.
But ever vigilant in its need to be of help to the industry, we would like to offer up the following shopping list for Bezos’ petty cash…along with the betting lines on each. Consider it another public service from your humble (bookie) servants at The Robin Report.
The odds-on favorite, the Menomonee Falls fellows have the right combination and DNA for Amazon. With 1,100 stores around the country they provide a national presence, yet one with a manageable footprint for upfront merchandise displays and backroom distribution centers. Plus the two are already working with each other on a limited basis and Kohl’s is now testing subleases with Ace Hardware and Aldi. Not a sure thing, but the closest thing out there.
Some of the same attributes as Kohl’s – national and strip center-based stores with easy access for incoming and outgoing deliveries – but the scale is the problem. Twice as many stores, twice as much space in the stores. And Target would have to admit they needed somebody’s help from outside, never its specialty. An interesting bet for someone who likes longer odds.
The price would certainly be right for Amazon and lord knows Fast Eddie and the Hoffman Mistakes crew couldn’t find a more attractive exit strategy to the nightmare on Main Street they’ve created. But the Sears stores are virtually worthless to Amazon and the Kmart units are in the wrong location, are too damn big and would require a lot of work to bring them up to an acceptable standard for human lifeforms. But boy, wouldn’t this be an interesting mash-up?
Too many stores and too much duplication with the Whole Foods operation. We know Amazon needs to figure out the super market business but this one would be very expensive and would require integrating a lot of moving parts. And Kroger is still not national. Unlikely at best, as the betting line shows.
Family Dollar or Dollar Tree
A bit of a long shot but an intriguing one. First off, having 10,000 or so stores would solve the last mile equation for Amazon and the bargain image fits into the perception, if not always the reality, that Amazon has the lowest prices around. The small footprints won’t hold a lot of inventory but the way Amazon’s supply chain replenishment works, that wouldn’t necessarily be a deal breaker. A dark horse.
CVS or Walgreen
Two more dark horses, but with some of the same attributes as the dollar stores, in terms of ubiquity. Plus they put Amazon into the big pharma and medical services businesses big-time and with one fell swoop. But both drug chains have their own long-term business strategies and the price to get either one will be steep… very steep. Certainly a bet you’d have to make knowing you probably will never see that money again…probably.
After all the failed turnarounds wouldn’t the Fisher family love to find a way to fall out of the Gap? It would give Amazon the foundation to really solve its apparel business struggles but it gets them into malls – where they don’t want to be – and into a business with way too much of a downside. Still Bezos loves to take chances – one can assume he was a hell of a Risk game player as a kid – so you never know. Who in their right mind would have ever guessed he’d buy Whole Foods?
Another choice totally out of left field – or maybe it’s left out? – this would have some pluses and many minuses. In the plus column: national, cheap to buy, moderate fashion presence, nowhere to go but up. On the other side of the ledger: Growing increasingly irrelevant to consumers, mall-based, stores are too big, exactly what are you buying? Then again Bezos might do it just to piss off Bill Ackman.
OK, it ain’t never gonna happen, Walmart is still three or four times the size of Amazon and there’s no way in Bentonville the Walton family is going to admit defeat and sell out to the enemy. Mr. Sam would roll over his pick-up truck in his grave. Besides, head-to-head competitors just never buy each other. It would be like Macy’s buying May Co. Or TJ Maxx buying Marshalls. QVC buying HSN. Never gonna happen…
Warren Shoulberg is a retail junkie, who has been covering the business long enough to have seen a lot of deals they said would never ever happen.