Amazon to open first retail clothing store

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Re: Amazon to open first retail clothing store

Post by HCal »

ClownLoach wrote: January 23rd, 2022, 3:15 pm
The FTC wouldn't raise an issue at all. Target does not have a significant "traditional" e-commerce business - they eliminated their e-commerce DC's several years ago as they were not busy enough and all the orders come from the closest store to the customer. So the e-commerce businesses have minimal overlap. Target true ship to customer e-commerce business added to Amazon would be such a tiny increase it would be like a rounding error.

Amazon does not have a retail discount store business, Target does. Amazon does not have a significant mainstream grocery store business, Target does (Whole Foods is a specialty). The reason an Amazon-Target merger would be a slam dunk is the fact that both companies fill in the gaps in the other business with almost zero significant overlap. Every few months a financial pundit will suggest the same transaction because they know it would go through.

FTC looks at when competition in the same category of business overlaps and results in a monopoly in the category. The Amazon Fresh stores are money losers and low volume so they would not be a significant obstacle and I'm sure they would close them all prior to finalizing a bid. What else is a true significant overlap between the two?
It really depends on how they define the market. Given that lines between e-commerce and physical retail have been blurring, and most customers now participate in both, I think they should be looking at the total market for each category of product regardless of modality. Online stores and physical stores do compete against each other, as can be seen in their pricing and sales tactics.

But as storewanderer said, the FTC (and arguably the government in general) have become a joke and will probably rubber stamp it after the companies donate some campaign funds to the correct people.
ClownLoach wrote: January 23rd, 2022, 3:15 pm The reality is that Walmart is growing slower than they would like to, but they are almost 7 times larger than Target. Target is surprisingly small and fragile by comparison. Walmart could do a price cut campaign and wipe Target off the map with surprising efficiency. Walmart could take a quarter of Target's total revenue and it would only result in a low single digit sales increase for them. They are going to get squashed unless they get bigger, fast.
Target is the 7th largest retailer in the country, and many of their customers would not be caught dead setting foot in a Walmart. They don't need to compete against Walmart on price. Walmart is already the lowest-priced store in most markets, so I doubt a price cut campaign would have much impact on anything. At the most, it might hurt local supermarkets and such, but Target will be just fine.



But back to the topic of this thread, I don't think Amazon views its retail stores (Fresh, Books, and now the clothing/department stores) as viable retailers. I think the goal of these stores is to boost online sales, by providing streamlined pickup and return locations and improving brand awareness. The boost in online sales should offset any losses incurred by the stores.
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Re: Amazon to open first retail clothing store

Post by pseudo3d »

arizonaguy wrote: January 24th, 2022, 11:06 am I don't understand Amazon's fascination with reinventing the wheel of retailing. If a catalog showroom clothing store was a successful idea someone would've done it before. The fact that it hasn't been done before shows that it's not a great idea.
I remember when Sears operated a store chain in the late 2000s/early 2010s where they closed a Kmart (near Joliet Square Mall, I believe) and converted it to a store called "myGofer", basically renovating a small section into a lobby/showroom and made the main store floor into a warehouse for employees to pick up orders. It didn't work (nor did it help that Sears was in the mall nearby) and probably wouldn't have worked given the SHLD corporate culture and lack of customer enthusiasm, but it was least a break from the norm and trying something new.

ClownLoach wrote: January 23rd, 2022, 3:15 pm But back to the topic of this thread, I don't think Amazon views its retail stores (Fresh, Books, and now the clothing/department stores) as viable retailers. I think the goal of these stores is to boost online sales, by providing streamlined pickup and return locations and improving brand awareness. The boost in online sales should offset any losses incurred by the stores.
Probably why they are branded as "Amazon" and not original concepts. But then again, they had lofty goals for Amazon Fresh and the "Go" stores...
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Re: Amazon to open first retail clothing store

Post by ClownLoach »

HCal wrote: January 24th, 2022, 5:30 pm
ClownLoach wrote: January 23rd, 2022, 3:15 pm
The FTC wouldn't raise an issue at all. Target does not have a significant "traditional" e-commerce business - they eliminated their e-commerce DC's several years ago as they were not busy enough and all the orders come from the closest store to the customer. So the e-commerce businesses have minimal overlap. Target true ship to customer e-commerce business added to Amazon would be such a tiny increase it would be like a rounding error.

Amazon does not have a retail discount store business, Target does. Amazon does not have a significant mainstream grocery store business, Target does (Whole Foods is a specialty). The reason an Amazon-Target merger would be a slam dunk is the fact that both companies fill in the gaps in the other business with almost zero significant overlap. Every few months a financial pundit will suggest the same transaction because they know it would go through.

FTC looks at when competition in the same category of business overlaps and results in a monopoly in the category. The Amazon Fresh stores are money losers and low volume so they would not be a significant obstacle and I'm sure they would close them all prior to finalizing a bid. What else is a true significant overlap between the two?
It really depends on how they define the market. Given that lines between e-commerce and physical retail have been blurring, and most customers now participate in both, I think they should be looking at the total market for each category of product regardless of modality. Online stores and physical stores do compete against each other, as can be seen in their pricing and sales tactics.

But as storewanderer said, the FTC (and arguably the government in general) have become a joke and will probably rubber stamp it after the companies donate some campaign funds to the correct people.
ClownLoach wrote: January 23rd, 2022, 3:15 pm The reality is that Walmart is growing slower than they would like to, but they are almost 7 times larger than Target. Target is surprisingly small and fragile by comparison. Walmart could do a price cut campaign and wipe Target off the map with surprising efficiency. Walmart could take a quarter of Target's total revenue and it would only result in a low single digit sales increase for them. They are going to get squashed unless they get bigger, fast.
Target is the 7th largest retailer in the country, and many of their customers would not be caught dead setting foot in a Walmart. They don't need to compete against Walmart on price. Walmart is already the lowest-priced store in most markets, so I doubt a price cut campaign would have much impact on anything. At the most, it might hurt local supermarkets and such, but Target will be just fine.



But back to the topic of this thread, I don't think Amazon views its retail stores (Fresh, Books, and now the clothing/department stores) as viable retailers. I think the goal of these stores is to boost online sales, by providing streamlined pickup and return locations and improving brand awareness. The boost in online sales should offset any losses incurred by the stores.
I think you have the reason right there - most Target customers wouldn't be caught dead inside a Walmart, but not all. The ones who have trouble making ends meet would change their routine if Walmart started significantly undercutting Target. Right now Walmart has moved away from national pricing and has implemented zone pricing which has raised prices substantially on the West Coast more than anywhere else - Target country. On many staples they are more than Target. But if they pulled that back and went aggressive on a real price campaign - they would give a good portion of their customers a reason to switch to Walmart. During periods of inflation and recession, Walmart has historically aggressively implemented loss leader pricing to grab market share. There is no reason to believe that they would ignore the opportunity now that people are starting to feel that pain in their wallets.

And the other group with ample money in their pocket that wouldn't shop Walmart? They're already spending more and more of their money on Amazon, at Target's expense.

Both sides of the coin say that a combination Amazon and Target is inevitable.
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Re: Amazon to open first retail clothing store

Post by storewanderer »

ClownLoach wrote: January 24th, 2022, 11:24 pm

I think you have the reason right there - most Target customers wouldn't be caught dead inside a Walmart, but not all. The ones who have trouble making ends meet would change their routine if Walmart started significantly undercutting Target. Right now Walmart has moved away from national pricing and has implemented zone pricing which has raised prices substantially on the West Coast more than anywhere else - Target country. On many staples they are more than Target. But if they pulled that back and went aggressive on a real price campaign - they would give a good portion of their customers a reason to switch to Walmart. During periods of inflation and recession, Walmart has historically aggressively implemented loss leader pricing to grab market share. There is no reason to believe that they would ignore the opportunity now that people are starting to feel that pain in their wallets.

And the other group with ample money in their pocket that wouldn't shop Walmart? They're already spending more and more of their money on Amazon, at Target's expense.

Both sides of the coin say that a combination Amazon and Target is inevitable.
Have you actually verified what the scan price at Target is on those items that they appear to be below Wal Mart on? I have seen this lately on some pet items and household items. I got to the checkout at Target thinking I was getting a deal paying 10-20% below the current (recently increased) Wal Mart prices. Nope- scan error. The price the items scanned was actually higher than Wal Mart's recently increased price by about 10%.

Wal Mart seems to be doing state by state pricing now on most consumables (including things like motor oil and pet food) but still national pricing on most general merchandise (kitchen, sports, garden, etc.). More localized pricing on a few grocery items (bananas, milk, private label bread, eggs- same items Kroger does localized pricing on).
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Re: Amazon to open first retail clothing store

Post by HCal »

ClownLoach wrote: January 24th, 2022, 11:24 pm I think you have the reason right there - most Target customers wouldn't be caught dead inside a Walmart, but not all. The ones who have trouble making ends meet would change their routine if Walmart started significantly undercutting Target. Right now Walmart has moved away from national pricing and has implemented zone pricing which has raised prices substantially on the West Coast more than anywhere else - Target country. On many staples they are more than Target. But if they pulled that back and went aggressive on a real price campaign - they would give a good portion of their customers a reason to switch to Walmart. During periods of inflation and recession, Walmart has historically aggressively implemented loss leader pricing to grab market share. There is no reason to believe that they would ignore the opportunity now that people are starting to feel that pain in their wallets.

And the other group with ample money in their pocket that wouldn't shop Walmart? They're already spending more and more of their money on Amazon, at Target's expense.

Both sides of the coin say that a combination Amazon and Target is inevitable.
Target may be small compared to Walmart, but it's still one of the largest retailers in the country, and I think they could respond quite effectively if Walmart started a price war. Other stores might get in on the action too.

Walmart knows that in the long run, this would not benefit either of them. That is why, as you mentioned, they are doing the exact opposite, and raising prices in Target country.

At least in California, Target and Walmart seem to serve different demographics. I doubt most Target shoppers are paying any attention to Walmart's prices. If anything, Walmart cutting prices would hurt the other discount stores (Aldi, Winco, Ross, TJ Maxx) more than Target. But I'm guessing that right now, Walmart is better off maintaining margins than trying to attract more customers.
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Re: Amazon to open first retail clothing store

Post by Brian Lutz »

Target also has the advantage of having places (particularly the deep blue cities on the West Coast) where it's basically impossible for Walmart to open a store due to hostile local governments that would either obstruct or outright block any attempt to do so. Not that a lot of those cities are great places to operate a store in the first place (given the current lawlessness in places like Seattle, Portland and San Francisco) but they can operate in some places that Walmart can't. Even in a lot of smaller cities Walmart tends to meet with significant opposition when attempting to open a store that Target (or Kroger with a marketplace store) doesn't have to deal with..
Last edited by Brian Lutz on January 25th, 2022, 2:28 pm, edited 1 time in total.
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Re: Amazon to open first retail clothing store

Post by pseudo3d »

Amazon only bought Whole Foods when it was being hounded by activist investors to do something and Albertsons was already sniffing at it. Given that Target lacks those crunch factors, I'd doubt that anything happens to them in the near term. Yeah, Walmart makes more than it, but they make more than just about everybody. If Kohl's or Macy's got into a real crunch then maybe Amazon would buy them.

Gut feeling is that Amazon KNOWS that Amazon Style won't turn a profit (nor will open additional stores) and is mostly for gathering metrics...THEN they'll decide if they want to jump into department stores.
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Re: Amazon to open first retail clothing store

Post by Brian Lutz »

pseudo3d wrote: January 25th, 2022, 1:15 pm Amazon only bought Whole Foods when it was being hounded by activist investors to do something and Albertsons was already sniffing at it. Given that Target lacks those crunch factors, I'd doubt that anything happens to them in the near term. Yeah, Walmart makes more than it, but they make more than just about everybody. If Kohl's or Macy's got into a real crunch then maybe Amazon would buy them.

Gut feeling is that Amazon KNOWS that Amazon Style won't turn a profit (nor will open additional stores) and is mostly for gathering metrics...THEN they'll decide if they want to jump into department stores.
Another possibility is that they're treating it mostly as an engineering exercise and using the store to build a platform that can be applied to future endeavors. This seems to be the main purpose of Amazon Go stores.
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