Retail conglomerate Wesfarmers Ltd (ASX: WES) is looking to channel some of Amazon.com, Inc. (NASDAQ: AMZN) magic to save its struggling department stores.
The ASX retail group selected Amazon to provide cloud-services to boost online sales of its embattled Target outlets, reported the Australian Financial Review.
Who better to provide such expertise than the world's largest online retailer that have made it an artform to target and track online consumers?
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Wesfarmers' Amazonian task
Wesfarmers picked Amazon Web Services (AWS) over Microsoft Corporation's (NASDAQ: MSFT) Azure, which is used by Woolworths Group Ltd (ASX: WOW).
The hope is that Amazon will be able to turnaround Wesfarmers' Target department store. The chain is the Achilles' heel in the business and the business has dragged on Wesfarmers' financial performance for some years – even before COVID-19.
But the pandemic made a bad problem worse. Consumers were forced online to shop due to rolling lockdowns, and it's retailers with the stronger web presence, like Temple & Webster Group Ltd (ASX: TPW) and Shaver Shop Group Ltd (ASX: SSG) that have benefitted.
Wesfarmers needing some Amazon retail magic
While Wesfarmers' other retail brands like Bunnings and Officeworks aren't exactly pre-pandemic online leaders either, they were at least allowed to operate during COVID restrictions as essential services.
Target's general manager Samantha McIntyre noted that its systems weren't up to the task before AWS, according to the AFR.
But now, Target's website can manage surge in traffic during sales events and can provide more timely inventory checks for shoppers.
"We've got really big aspirations in the online space and really want to grow that, and we're really super excited with how Black Friday went," the AFR quoted McIntyre as saying.
"Sales of apparel, particularly kids wear was very strong, and now we are in our busiest period leading up to Christmas."
Wesfarmers share price holding its ground
Target will need all the help it can get as it struggles to stand out in a highly competitive retail environment.
Wesfarmers owns some of the most well-known retail brands in the country. But it's been slow to adopt the online shopping revolution despite buying Catch.com.au.
At least the conglomerate is moving quickly to close the digital divide. Shareholders will also be relieved that the Wesfarmers share price is holding up well with gains of around 17% in 2021.
That's about in-line with the S&P/ASX 200 Index's (Index:^AXJO). It's also much better than the JB Hi-Fi Limited (ASX: JBH) share price, which is down around 3% for the year.
