Signs of the Times - February 2018 - 53

income was $19.58 billion. The $550 million price tag for
Shipt is lunch money; therefore, a Shipt failure isn't a crisis;
it's a comfortable write-off.

MISSED TARGET?
In a Dec. 12, 2017 Forbes article, Sucharita Kodali, vice
president, principal analyst for Forrester (a market research
company) called Shipt an "Uber for groceries." Kodali said
Shipt's service merely provides a bevy of drivers who shop
for and deliver client-ordered items. She also said Target's
buying of Shipt won't make same-day delivery any easier
and stressed that most shoppers won't pay for such service.
Kodali said such online orders add up to $20 per gig, meaning
that most buyers won't bear the cost, adding that consumers
prefer free delivery.
Still, it's big, online purchasing, so you can see why
Target is interested. Writer Laura Stevens, in a June 8, 2016
Wall Street Journal article, said the Commerce Department
reported that total online spending comprised 7.8% of
all retail purchases in the first quarter of 2016, while
Forrester has recorded that more than half the population, or about 190 million US consumers, will shop online
this year.
Here's another detail: Target's 2016 sales reached $73.79
billion, its cost of goods was $54.21 billion and its gross

LIKE BUYING A TRUCK?
It's easier to fathom mergers and acquisition activities if
you associate such challenges with everyday tasks, like
buying a truck. A used bucket truck, for example, that a
dealer took in trade and thought you might want to buy.
"Hell of a price, too good to miss," the salesperson says,
adding, "You could use it as an auxiliary profit center by
hiring a guy to cruise the area looking for signs needing
repair." Such ideas replicate like summer weeds and, too
quickly you're caught up in the salesperson's enthusiasm.
Then you go look at the bucket truck, immediately noting
the leaking hydraulic seals, cupped tires, rust splotches
and, when driving it, the throw-out bearing warble and
white exhaust smoke on downhill runs (that means the
valve guides are jiggered). The reality is this bucket needs a
complete engine rebuild, body work and lift system overhaul. It's not at all what the salesperson described.
A merger example is that your shop phone rings and
a raspy voice introduces itself as "Bud" from Bud's Signs.
Bud says he's going to retire and move, but wants his son to
continue the business. He wants to merge with your shop,
so the son would have ongoing support and guidance.
Plus, "I got a good deal for you," Bud says, and tells of
owning two primal but workhorse cutting routers and a
year-long, $128,000 contract with the state park service.
Do you stop over to talk?
REAL WORLD ADVICE
For more of a street view of merger and acquisition
challenges, I talked with Sam Clark, the relatively new
owner of The Sign Shop of Sheboygan (Sheboygan, WI),
and businessman Michael Sager, developer of Tulsa's Blue
Dome District.
For Clark, an acquisition became formal when, in April
2016, the Sheboygan County Economic Development
Corporation (SCEDC) announced Clark's acquisition of
The Sign Shop of Sheboygan, as well as plans to relocate
the business to an expanded facility to better serve customers.
The press release said, "For the past two years, Clark has
served as VP of Sales and Marketing for The Sign Shop
with plans to eventually acquire the business. He has over
ten years of experience in the sign and graphics industry
and has served in all areas of the business including design
and graphic installation."
I telephoned Clark to ask him about the buying/acquisition process. Polite and quiet in Wisconsin style, he

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