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.

FILED UNDER: General,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. More on Target v Wal-Mart
    James Joyner on Target v Wal-Mart: Wal-Mart is starting to lose its edge over more upscale rival Target, if recent stock trends are any indication…Since moving to Northern Virginia, which has the worst Wal-Mart stores I’ve seen in years, I’ve…

  2. Wal-Mart and Target: trading places?
    James Joyner links a Chicago Sun-Times story that points to less-than-rosy times for the giant Wal-Mart, while Target continues to gain ground.

    As James notes:
    Since moving to Northern Virginia, which has the worst Wal-Mart stores I’ve seen in ye…

  3. bryan says:

    The numbers do tell a different story than the doom-and-gloom headline. Wal-Mart profits were up 14 percent in the first quarter. They just didn’t meet expectations from “analysts.”

  4. Brian J. says:

    You’re letting facts get in the way of the narrative. Stop thinking and simply receive the wisdom in the myth.

  5. Fersboo says:

    I still don’t understand the radical left’s hatred of Walmart. I get the whole greedy captialist thing, but it just doesn’t seem to explain all the hatred.

    I generally do not shop at Walmart, preferring Target. That is a preference based on lines, clientelle, quality of goods, etc. So, I guess Walmart is my second choice.

    I don’t really have a point, just kind of cheerleading for the large superstores. Anything to piss off the loony left.

  6. Mark says:

    I completely agree with your assessment of Walmart stores. The ones in Daphne, AL and Destin, FL were wonderful and I went to them constantly. The one in Kingstowne, VA is a dirty rathole that I refuse to step foot in unless as a last resort.

  7. The Grand Wal-Mart Unification Theory
    I’m, obviously, not an economist and I’m probably completely wrong, but I always find it strange that the market reacts…

  8. Matt says:

    Living, as I do, within thirty miles of WM headquarters, I rarely see a crappy looking store, but I always find it interesting to hear about how bad they are in some regions. It is a total reflection of management focus. Store in the northeast have never been as profitable to the company as they’d like and, stupidly, in my view, they receive less attention. Store in places like Florida are enormously profitable and have much more hands-on involvement from the leadership. They’d never admit this, of course, but in the five years I spent there I saw it over and over.

  9. James Joyner says:

    I think, too, that there is more effective opposition to Super Centers and other “nice” Wal-Mart stores in the more affluent areas.

  10. bryan says:

    Could it be that this is a red state-blue state divide?

  11. This article from last November seems quite relevant: The Bleeding Beast of Bentonville

  12. carpeicthus says:

    It has much more to do with the specific, pernicious business practices of Wal-Mart than whatever visions you’ve cooked up in your head. Target is also a giant, capitalistic enterprise, and I’m glad to see them succeeding. But you’re comfortable rolling around in straw, so have fun.

  13. Fersboo says:

    ‘It has much more to do with the specific, pernicious business practices of Wal-Mart than whatever visions you’ve cooked up in your head.’

    Would you care to elucidate which business practices are pernicious, Carpeicthus? We aren’t talking about the same business practices that Ben & Jerry’s, Progessive Insurance, and others of the BuyBlue fame are we?

    ‘But you’re comfortable rolling around in straw, so have fun.’

    I just love when someone talks to me like I am a farm animal; it lends so much to the discussion.

    Oink baby!

  14. McGehee says:

    Carp, readily observable issues at actual stores are much more likely to affect patronage than ideologically motivated issues that actual shoppers rarely if ever even consider, much less take into account.

    As for “rolling in straw,” I never even knew it was possible to make a strawman argument in the form of a strawman accusation, but you’ve done it. I’m impressed.

  15. Kent says:

    more upscale rival Target

    That must me why my wife pronounces it “Tarjey.”

  16. ozzippit says:

    Wide variances in store cleanliness and aisle clutter are my Wal-Mart experiences, too. Target seems to have succeeded in getting its stores to a high standard, after remodeling them. Wal-Marts in my home area are being remodeled into Super Wal-Marts, so they might have higher standards for them, too? Regardless of item pricing, though, store uncleanliness and clientele in tanktops, flipflops and shorts showing butt cracks can drive me back out the door to a competitor.