Target steps backwards to offer the Kindle to your Grandma

The big retail news of the week: Target will start selling the Kindle in it's stores for Amazon.com exclusively in the mass market.

For a retailer who prides itself on offering far trendier merchandise and marketing than most, this is a puzzling move. While the digital book reader was hot for 5 minutes last Christmas, it is already outdated technology since the arrival of Apple's ipad.

This is akin to Target touting they are the exclusive retailer of black & white television after color TV arrives.
How Target's buyers could even imagine this was a great idea is beyond comprehension. By the fall Holiday shopping season, it will be clear that the number one gift requested will be the ipad. The only ones who are going to be receiving the Kindle will be grandparents who don't know any better or pay attention to them "new fangled contraptions" and very unfortunate teens who despite asking for the ipad will get the Kindle because either the gift giver is technologically illiterate or simply because the Kindle was cheaper.

Which means at that point both Amazon and now Target will be banking on the hopes that the consumer of the Kindle will be the technically illiterate.
Amazon would continue to have far better luck trying to sell this doorstop online and not allow the consumer to have a hands on, side by side comparison of the two products. You are going to now allow a potential consumer to play with the Kindle in a Target store, and then pop over to their local Best Buy and check out an ipad. How would you expect 99% of those purchasing decisions are going to play out?

The other interesting aspect of this story is the partnership between the two companies. Target.com has for years been tethered to the Amazon.com's ecommerce platform. Last year, Target made the decision to leave Amazon and are currently spending millions of dollars constructing their own platform from scratch. The complete break and relaunch is currently set for mid to late 2011. When the economy tanked in late 2008, so did Target.com's online traffic and sales. They have been in freefall since while Amazon as seen record traffic and profits in a down economy. Amazon is indisputably on track to rival Wal-Mart domestically in sales in this decade. Target finally realized that Amazon could very well end up their number one competitor and needed to quickly get out of bed with the former partner.

So it's interesting that the two are excited about partnering up now on this particular venture. Just can't see the advantage for either side here. Target selling an out-of-date, overpriced text reader and Amazon actually letting the item be compared to the ipad at mass. Perhaps Target thinks they are sticking it to Apple...sending them a message. Not that Apple could give a shit. Apple doesn't need any one retailer out there.

So if you are in the market for a Kindle for your Grandparents, just stick around and wait until it's in Target's clearance aisle for $30.

TRU on the rise

Nothing but happy news coming out of the Toys-R-Us headquarters today.

Earnings for the 4th Quarter of 2009 were up 12% but up 43% for the entire year. On top of this, TRU was clearly carving market share out from both Wal-Mart and Target. Each lost at least a point of market share in the toy category although we would guess in specific categories the loss for each was greater in the 4th quarter. (We know for a fact that Target lost market share in the Boys Action category last year.) TRU was much more aggressive in marketing themselves during the Holidays than Target was. And unlike Target's team, TRU is likely to be just as aggressive again this fall and apply lessons learned from the past year.

Based on the details of this week's report for TRU, many analysts are high on the company's future. In fact, it's reported that TRU is very likely to finally go public with an IPO offering at some point later this year. Probably late in the second quarter to maximize the positive performance in 2009, while the toy industry is on the upswing in 2010 and before holiday competition heats up in the fall again.

Read all the juicy details of the TRU financial report here.

As we've observed before, this has been an amazing turnaround for a retailer who was on the ropes three years ago. It also remains a fact that a healthy Toys-R-Us means a healthy toy industry as a whole. It will once again be very interesting to see how the big retailers compete again in the Holiday shopping season of 2010. Hopefully, they will all get over the fear of inventory and start keeping them pegs stocked up again and keep assortment turnover rolling once more.