Are Macys or Kohls Next on Amazons Wish List?

Speculation is building that Amazon could be eyeing an acquisition of another major brick-and-mortar retailer. Reports have suggested that it might acquire Macys or Kohls, both of which just reported less-than-stellar quarters.

Last week, Barrons wondered if the Seattle-based e-commerce mega-corporation is considering a purchase of Wisconsin-based Kohls. The department store is already partnering with Amazon and debuted new in-store Amazon shops that sell Amazon-brand products like the Echo, Fire TV, Kindle and more. It is also serving as one of two stores that will now accept Amazon returns free. The other? New Amazon subsidiary Whole Foods.

According to Barrons, selling its own brand products inside Kohls stores could be part of a larger strategy in brick-and-mortar retail for Amazon:

Bernard Sosnick, who follows Kohls for Madison Global Partners, thinks Amazon is testing the merits of owning a retailer that can build private-label products to showcase Amazon devices and services. The holiday season will test the theory further, with a fuller answer emerging by mid- to late-2018, Sosnick says. If the partnership succeeds, he thinks Kohls will boost sales and even improve merchandise and marketing. Kohls has more than 1,100 stores in 49 states.

If Kohls keeps struggling, however, Sosnick says its management might have a greater incentive to sell. And at a $7.5 billion market capitalization, Kohls might seem a bargain to Amazon, especially if Amazon were to believe it could gain benefits from owning stores as showcases, he said.

Notably, that $7.5 billion is $2.5 billion lower than what CEO Jeff Bezos made in a single morning after the companys blow-out third quarter. And after acquiring Whole Foods for $13.7 billion, its clear that acquiring Kohls is well within Amazons considerable budget.

In the Barrons piece, Sosnick added, We think Bezos has something up his sleeve with potentially profound consequences for retailing.

So, is making a play for Kohls whats up Bezos rolled-up sleeve? Or is there another major retailer on Amazons radar screen?

A new report suggests that if Amazons is venturing further into brick-and-mortar that Macys would be the target. This suggestion is nothing new. But the timing is interesting, given the mounting speculation about Amazons interest in a major retailer.

Here in Seattle, Amazon is already moving in on Macys territory, leasing the six floors above the downtown department store at 300 Pine St. Symbolically, Amazon bringing its weight down upon Macys is almost too on-the-nose, as it continues to crush brick-and-mortar retail.

The 2017 holiday shopping season is projecting to be another one in which Amazon deals a losing hand to brick-and-mortar retailers like Macys and grows its e-commerce market share. And Amazon is not only selling more, its hiring more for the holidays, with 120,000 seasonal employees in 2017 to Macys industry-leading-but-still-declining 80,000.

Amazon winning the retail war is inevitable. The only question left, seemingly, is how it will happen.