Here’s why Amazon may not buy Target

Here’s why Amazon may not buy Target

Target is a little bit of this, a little bit of that — its roughly $70 billion in sales are scattered nearly equally across its various businesses.

In 2016, household essentials (pharmacy, beauty, etc.) generated 22 percent of its sales; food generated 22 percent; apparel and accessories generated 20 percent; furnishings and decor generated 19 percent and hardlines (electronics, sporting goods, etc.) generated 17 percent of its sales.

Many of these businesses, particularly household essentials, home and hardlines, are areas in which Amazon already excels (it might, though, benefit from Target’s furniture sales). It is therefore not clear that adding Target’s hold on the those businesses would do much more than cannibalize Amazon’s own sales.

Food, meanwhile, is an area in which Target has struggled. Not to mention, Amazon already has a foothold into the space through its Whole Food’s acquisition.

Apparel might be the one channel in which Target, at this moment, surpasses Amazon. It is also an industry Amazon seems to care about: It has invested in private label brands, launched a try- before-you-buy service and even patented a mirror that dresses you in virtual clothes.

Target has been largely successful in its clothing business, particularly in its private label ventures. Its Cat & Jack brand crossed the $2 billion mark a year after its launch. Target plans to launch at least 12 more brands on the heels of its success.

But part of Target’s private label success has come from its focus away from selling third-party brands as a means of driving people into its stores and off of Amazon. Amazon, meanwhile, has been courting brands to sell on its website, including Nike.

Further, while Target has had success with private label, it is not clear that Amazon could not (or is not) successfully doing private label apparel on its own.

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