"Amazon believes the future of retail is a mix of mostly online and some offline", wrote the analyst.
Target is the ideal offline partner for Amazon for two major reasons, the firm said: shared demographics and a manageable but comprehensive store count (with roughly 1,830 stores).
"Getting the timing on this is hard, but seeing the value of the combination is easy", Munster wrote.
The company did buy Whole Foods for $13.7 past year.
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The key investor takeaway is that Amazon won't buy Target or at least shouldn't buy the stagnant retail company.
More than advancing Amazon's retail business, Saunders sees Target's logistics and supply chain as a greater value. Year-to-date, AMZN has declined 0.00%, versus a 0.31% rise in the benchmark S&P 500 index during the same period. He's long predicted that Apple will release its own TV at some point and has pushed rumors that the company will produce its own vehicle, both of which have yet to come to fruition.
Department store Myer also made a bid to compete with Amazon with its online marketplace the Myer Market, a venture that allows third party vendors to sell on Myer's platform in exchange for a sales commission - mimicking the model used by Amazon Marketplace and Ebay. "Amazon has, over the years, aggressively pursued mom's through promotions around Prime along with loading Prime Video with kid-friendly content", Munster said.
The domestic number would dip even further where Amazon is forecasted to hit $105 billion this year and Target is almost the same size at $71 billion.
Munster noted the deal would not come without its fair share of obstacles, including increased scrutiny from the Trump administration that may look to use antitrust laws as a way to punish Jeff Bezos, Amazon CEO and owner of the Washington Post-which has regularly produced critical coverage of President Trump. "However, for any acquisition to work, Target needs to bring something to Amazon that Amazon can not achieve itself". The decision would make a lot of sense, as Target already operates over 1,800 stores and is popular with the mother and family demographic. Last month, CFRA bank analyst Ken Leon predicted that it will purchase a small or mid-size bank.