Once a powerhouse in American retail, Sears Holdings (SHLDQ) has now become one of the most hard-pressed department store chains in the sector. Having battled through some 28 consecutive quarters of sales declines, a daunting number to say the least, time might be running out for the company that has so far failed to produce a sustained turnaround.

However, there may be one way to save the struggling retailer. Some analysts, most notably retail expert Robin Lewis, believe that a takeover by Amazon.com (AMZN -1.64%) would benefit both companies and that it is perhaps the only way to keep Sears alive.

What's in it for Amazon?
Amazon, rapidly becoming the biggest US retailer, has several reasons to be interested in Sears, according to Lewis. While Amazon is currently the dominant force in online shopping, it still has a fairly limited offline footprint. At the moment, the company only has fulfillment centers in about 14 states, and CEO Jeff Bezos is looking to expand this network.

Sears, which together with K-Mart has about 2,400 retail locations, would almost instantly provide Amazon with a huge network of potential fulfillment centers; this would boost Amazon's omnichannel presence, allowing easier pick-ups and drop-offs for customers and speeding up deliveries. Moreover, the deal would represent a bargain for Amazon, according to Lewis. Sears is currently trading at a fairly steep discount due to its financial woes, currently on the market at only 0.1 times sales. Moreover, Sears still has a number of valuable brands which Amazon could resurrect.

The question is whether it would be cheaper for Amazon to acquire Sears' retail locations than to build its own fullfilment centers. Since 2010, Amazon has embarked on a $13.9 billion spending spree on fulfillment expenses, and in 2013 owned around 329,000 square feet of fulfillment and data centers with 94 of its own warehouses. As for leases, the company company spent $963 million on capital leases and $752 million on operating leases in 2013, and some $2.3 billion on fulfillment expenses in the first quarter of 2014, up from around $1.8 billion last year. For the first quarter of this year, property and equipment acquired under capital leases totalled $716 million, up from $340 million last year, so Amazon is definitely not afraid to spend money on real estate.

Now let's take a look at what Amazon might get if it purchased Sears outright. Sears owns or occupies about 2% of US retail space, which is more than 260 million square feet, and analysts value its property holdings at between $4 billion and $7 billion. As the company has a current market cap of $4.6 billion, this property seems like it's trading at a discount, and definitely costs less than the $13.9 billion Amazon is currently spending on new fulfillment centers. On paper, it looks like a good deal. However, there would be other costs involved.

While a greater offline presence would further solidify Amazon's dominant position, not everybody is convinced it would be a good move for the online retail giant. According to some analysts, the costs of retrofitting K-Mart and Sears locations would be a huge burden, potentially outweighing the benefits. Moreover, some analysts have cast doubts on the value of Sears' property, as there are already 119 closed Sears location available for sale, and that the company will become even cheaper in the future as it is still unprofitable.

What's in it for Sears?
This one is almost a no-brainer. Sears posted a loss of around $1.4 billion last year, and CEO Eddie Lampert is assumed to be looking for an exit strategy. The company has already been working on selling, leasing, and closing its Sears and K-Mart locations and has embarked on a complicated process of reorganization into some 30 business units.

Sears has simply not been holding up as well as its competitors in an increasingly difficult brick-and-mortar retail environment. Target (TGT -0.70%), for example, has been trying to take the fight to Amazon's doorstep, recently introducing a program called Target Subscriptions. This service allows customers to order more than 1,500 daily use products such as printer ink, laundry detergent, and diapers with free shipping at a 5% discount. While the move is unlikely to steal away any significant business from Amazon, it indicates that Target is willing to put up a fight.

The bottom line
Sears has been struggling for some time now, and things seem unlikely to improve any time soon. With Lampert reportedly on the lookout for an exit strategy, already having sold and closed a number of Sears and K-Mart locations, speculation is growing that Amazon might put in a bid for the embattled retail chain. Such a deal would allow Amazon to potentially expand its offline footprint in a big way, and save Sears. However, some doubt the value of Sears' property, and argue that a potential tie-up would not be as good as it looks. With the rumors unconfirmed, Amazon still seems happy with building its own fulfillment centers.