Dark Days at Wal-Mart; Bright Times for Target
Wal-Mart is starting to lose its edge over more upscale rival Target, if recent stock trends are any indication.
Dark days at Wal-Mart; bright times for Target (AP – Chicago Sun-Times)
Wal-Mart, struggling with higher gasoline prices and slippage in its leadership in the retail industry, reported lower-than-expected first-quarter earnings Thursday, and offered a disappointing profit outlook. Discount rival Target, which keeps sharpening its appeal to higher-income consumers, enjoyed first-quarter results that exceeded expectations. It offered an upbeat outlook.
”There’s no question that higher gasoline prices have hurt Wal-Mart’s consumer, but Wal-Mart is struggling with store-level execution,” said Bob Buchanan, a retail analyst with St. Louis-based A.G. Edwards. ”They’re slow at checkout, and they’re missing a lot of fashion on the selling floor. Target continues to do a better job in merchandising and executions. And its checkout is lightening fast.”
Since moving to Northern Virginia, which has the worst Wal-Mart stores I’ve seen in years, I’ve avoided Wal-Mart and shopped at Target whenever possible. While its prices are slightly higher, its better customer service, convenience, and pleasant atmosphere are worth the trade-off.
Still, Target is not going to surpass Wal-Mart anytime soon. Target stores are not nearly as ubiquitous. Wal-Mart has pursued a business strategy of putting Super Center stores even in smallish communities, such as Jacksonville, Alabama, where my parents live. Indeed, there are three Super Centers within 25 miles of their house. By offering low prices and tremendous selection on everything from tires to peanut butter, they’ve captured a huge chunk of the consumer dollar in much of the country. Target has nothing like that level of market penetration.