Most retailers are afraid of Amazon (AMZN) – Amazon.com Inc. report received.
This is understandable as the online giant has grown so much that it has all sorts of advantages over most of its competitors. It can offer low prices and next-day delivery on all types of goods.
Amazon has used its scale to penetrate almost every area that its competitors sell. You can buy electronics, housewares, furniture and yes, clothing on Amazon. The problem is that while you can buy a charging cable or end table without touching it, you might not think of clothes that way.
People not only like to look at clothes, they also like to try them on. That’s something Amazon just can’t do. The retail leader sells everything from yoga pants to swimsuits and underwear, but these products have struggled to gain traction.
When it comes to clothing, a virtual storefront just doesn’t work as well as a real one. There is the cabbage (KSS) – Get Kohl’s Corporation Report could play an important role for Amazon.
Frederick J. Brown/AFP via Getty Images
Kohl’s Board put up for sale
Kohl’s board of directors recently completed a process that did not result in the sale of the company. This is somewhat surprising as the company had been negotiating a sale with the franchisee group.
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“After a complex procedure involving more than 25 parties, the Federal Republic of Germany emerged as the top bidder, and we entered into exclusive discussions and made further investigations possible,” said CEO Peter Bonparth. “Despite concerted efforts by both parties, the current financing and retail environment poses significant obstacles to reaching an acceptable and fully executable agreement. Given the environmental and market volatility, the Board of Directors determined that a transaction should go ahead. There is no point in continuing.”
Bonparth made it clear that the retailer is open to a deal but that the current offerings are not maximizing shareholder value.
“Kohl’s is a financially strong company that generates significant free cash flow and has clear plans to strengthen its competitive position and improve performance over the long term,” said Bonneparth.
Kohl’s and Amazon complement each other
Amazon wasn’t among the bidders for Kohl’s, but the two retailers are already working together. You can take your Amazon returns to any Kohl’s location, and the relationship has been positive for both companies.
However, Kohl’s and Amazon could have done a lot together. The brick-and-mortar chain has suffered in recent years from not developing its store mix. It allowed aim (TGT) — Get the Target Corporation Report — which has invested heavily in celebrity partnerships and owned and operated brands — to get ahead as Kohl’s clothing target.
Amazon may solve this problem while also fixing one of its own. The online giant has dozens of clothing lines that would benefit from being displayed in a physical store. In theory, people could see Amazon clothes at Kohl’s, touch them, try them on, and later buy more of them digitally.
These two retailers actually fix each other’s problems. Kohl’s needs new merchandise, and Amazon desperately needs a physical space to showcase the clothing brands it’s invested heavily in. Of course, Amazon could use more and more physical locations for logistics and fill out its network.
Kohl’s will also benefit from having an owner with purchasing power equal to, if not more than, Target and Walmart (wmt) – Walmart Inc. report received. These two companies make sense together and are really strong together.
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