Target vs. Wal-Mart (Round 15,819,292...)
Yesterday, Target Corp. announced a second-quarter revenue spike of 9.5 percent, raising it to a whopping $14.6 billion. Per share, Target also reported a 10-cent increase (from 70 to 80 cents) over the same quarter last year.
On the same token, a week ago, rival Wal-Mart Stores, Inc. announced its own 2Q earnings, but they were a bit lower, only rising 1.2 percent over the quarter. Company shares also increased, but only by four cents (72 to 76 cents) over last year's 2Q.
Why? While Wal-Mart has always made a commitment to lower prices, Target has expanded its own product base, launching its "Design for All" line, which features women's shoes by Isaac Mizrahi.
Just because a company has the greatest selection of merchandise and the lowest prices won't guarantee anything. Merchandise quality has to be high across the board, and the in-store shopping experiences need to be pleasurable, and this, for sure, is one place where Target blows Wal-Mart out of the water, even though in-store purchases have steadily declined since the advent of Web shopping. (According to an Accenture report from April, 67 percent of consumers still prefer to shop in brick-and-mortar stores, but 69 percent of consumers research the products online.)
Also, have you been to Wal-Mart lately? Seriously, have you? I mean, I'm talking about nonexistent, even incompetent customer service, long lines, shoddy merchandise and filthy, filthy stores.
Now, have you been to a Target? They have quality goods and floors you can practically eat off of.
Has the retail experience really gotten this bad? Perhaps. And shopping at Wal-Mart is stressful enough to make anyone shop online...
Comments
Something else to consider is that Walmart has literally saturated the market. Target is aggressively going after various segments (including once-loyal Walmart shoppers like myself) with unique positioning. You're right - shopping at Target is a breath (or should I say much-needed gulp) of fresh air compared with shopping at Walmart.
Posted by: Carolyn Kent | August 22, 2007 9:46 AM
Helps that Target was an early believer in the significance of design, thus invested there before marketing it, whereas WalMart may STILL not get the importance of that to the consumer... Sometimes better design IS a bigger deal than a mildly lower price...
Posted by: K C | August 27, 2007 8:59 AM
I completely agree with the idea that quality mdse and a pleasant shopping experience trump low prices every time. It's a fine example of what I've come to see as a marketing axiom: "It's never the price; it's always the value. It's NEVER the price; it's ALWAYS the value."
When it's the price it's because people do not perceive a noticeable difference in product attributes or benefits. Retail shopping is one example where people will generally pay more for clean stores, organized and neat merchandise, helpful and courteous staff, and easy check-out. When will retailers wake up?
Posted by: Ann Middleman | August 28, 2007 10:17 AM
It's interesting you say that. I think consumer expectations have gotten so low that all they see is the bottom line: the price. When you go to Wal-Mart, you know that you're in for a subpar shopping experience. (Which is why when I hit up a big-box store, I go to Target.)
But if you're a person of low-income, Wal-Mart will be the spot, even in cities like Chicago.
Posted by: Daniel B. Honigman | August 29, 2007 3:40 PM
Wal-Mart has lost its way because of its attempt to move upscale which has not been successful in attracting the Target customer. However it has offended the traditional customer that liked Wal-Mart due to its low price and focus on serving customers on the lower end of the economic spectrum. An example of this is the decision by Wal-Mart to end their lay-away program.
Posted by: Mark Hunter | September 1, 2007 6:06 PM