Target Gets Pounded by Wal-Mart

We’ve seen the sales figures for months now, but this article nicely illustrates just how badly Target has gotten slapped around by Wal-Mart over the last year, especially in November when the former saw a same-store sales decline of 10.4% compared with Wal-Mart’s 3.4% gain.

Piper Jaffray analyst Jeffrey Klinefelter puts it well: “It’s the aspirational, trade-up customer who’s got slightly above-average household income that has really been affected by housing issues. This is the population that Target has just owned, and their struggles are throwing off Target’s formula.”

The Minneapolis Star Tribune goes on to say that there is nothing particularly wrong with how Target is operating, it’s just that its core consumer is facing really tough times.

We went into our local Target, near Downtown Brooklyn, over the weekend. It kind of felt like what we would imagine shopping in a Soviet-bloc country would have been like, except messier. Merchandise was strewn all over the place, and the shelves were ravaged, with whole sections of products not restocked. Lines were epic.

To their credit, though, employees were friendly and seemed to be doing all they could. The place was totally mobbed, but you’d think on one of the remaining Saturdays before Christmas they’d be better prepared.

We’re just glad they weren’t selling $99 iPhones.


8 Responses to “Target Gets Pounded by Wal-Mart”

  1. 1 little nat December 16, 2008 at 9:29 am

    Interesting to see this happen. Target has mostly been a womens store in the past and as always the women cntrol the purse strings. Good for them to get control of themselves,when most go shopping just to get out of the house. They do have great snacks. At least no one has gotten killed at a Target.

  2. 2 ColnagoMan December 16, 2008 at 10:19 am

    My experience is, Target merchandises its products better than WalMart; Target’s buyers do a better job keeping up with styles and trends; and Target’s products and branding have a superior feel and look (when compared to Walmart). But, Target’s return policy is painfully difficult. If we’re buying for someone else, or, if there’s a chance we may want to return/exchange an item, we avoid Target. For everything else, I prefer Target over Walmart.

  3. 3 GetReal December 16, 2008 at 10:30 am

    Your experience with the messy Target is very interesting. I’ve never seen a Target that wasn’t neat. The closest Wal-Mart to my home is dirty, messy and depressing all year around. Target employees look sharp; the Wal-Mart vests are dowdy. Target merchandise lines are very comparable with department stores, but the prices are better. Wal-Mart compares with K-Mart in apparel.

  4. 4 Jim December 16, 2008 at 10:45 am

    Retailers everywhere are taking it on the chin right now. And sure, in the panic some of Target’s market share has moved to Wal-Mart. This doesn’t mean Target needs to change it’s core business plan. More importantly it should signal to all of us it’s time to buckle down and ride out the storm. When the dust settles, and consumer confidence is restored, Target again will emerge has the leader by providing customers both value and style.

  5. 5 pb in boston December 16, 2008 at 11:44 am

    Jim, your comments are right on…

  6. 6 James December 16, 2008 at 3:24 pm

    If the FTC can seriously consider the Whole Foods/Wild Oats merger as monopolistic maybe they need to take a hard look at Walmart who is basically canabalizing the market and putting everyone out of business. If, as I commented earlier, the test of a monopoly is “what happens if they disappear” in the case of Walmart alot would happen. A dominent force like Walmart eventually will drive our standard of living down, not up. Eventually they will have suppliers squeezed so tight that they will also have to consolidate and produce cheaper goods (not better goods) and pay lower wages. And by the way Walmart already has tacit control of these companies thru their buying power. Selection and variety suffer along with quality and service. The influence is insidious not beneficial.
    If you buy enough crap from China eventually you will become China.
    When did we all decide we wanted to be like China?? Did you notice Walmart’s shift from red, white and blue to the more universal Blue and Yellow?? All of you willing to live on the minium wage with no benefits raise your hand, they want to send you an employment app.

  7. 7 Mike Wilson December 17, 2008 at 9:49 am

    Thanks to James for his comments about Wal-Mart, (and the FTC looking the other way). Over a dozen years ago, I made a sales call on them. I sat in the vendor waiting area and listened to all the salespeople talk about how Wal-Mart “owned” their companies. They couldn’t afford to keep, or lose, them as a customer. Wait till they are the only grocer left, the only bank on the corner, the only insurance company, the only people to sell you a car, or pretty much anything else.

    The only reason the FTC is looking into the Whole Foods deal is that they are not big enough to lobby. Did the FTC put up a fight about any airlines mergers that brought us such lovely service? Do you think a merged GM/Chrysler is actually going to build a better car?

  8. 8 Robert December 17, 2008 at 1:00 pm

    I all comes down to good marketing. When companies like Target and other large retailers tighten up. Walmart pushes up their advertising spending thus grabbing more market share.

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