Contact: Scott Denne
While Walmart is attacking Amazon by air with its Jet.com asset, Target is planning a ground assault. Its acquisition of Grand Junction marks Target’s reentry into the tech M&A market after a nearly three-year absence. And although the price is likely modest – the target only has a dozen or so employees – it aligns with the big box retailer’s expansion strategy.
The deal adds to the list of steps Target is taking to adapt its business to the growth in digital shopping by leveraging its physical assets to improve fulfillment (both in cost and quality of service). The company has worked with Grand Junction on its first experiment with running same-day delivery out of one of its Manhattan locations. It’s also opening a new distribution facility designed to test supply chain and logistical innovations, integrating its existing stores with its digital supply chain and launching 100 new small-format locations.
Even its previous tech acquisition, PoweredAnalytics, expanded its physical capabilities by analyzing data to adjust the in-store experience. Its focus on adapting its physical assets to digital shoppers makes Target’s M&A strategy unique. Walmart, for example, has gone after established e-commerce businesses, starting with Jet.com, to build a niche in online retail in areas like fashion where Amazon hasn’t yet made its mark. Other traditional retailers and consumer goods vendors have bolted on firms that bring them into new markets, such as Barnes & Noble Education’s recent reach for student media provider Student Brands or Whirlpool’s pickup of recipe site Yummly.
Although retailers and consumer goods companies still make up just a fraction of overall tech M&A, their activity has grown as they encounter an accelerating pace of store closures and bankruptcies as shopping shifts to online channels. According to 451 Research’s M&A KnowledgeBase, those buyers have spent $4.7bn across 22 tech transactions in 2017, the same pace as last year’s record level of dealmaking.
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