Wal-Mart vs. Target and its Effects on Consumers

Today’s consumer driven society is characterized by big firms and wide variety at each locale. Wal-Mart has long been the biggest retailer in American markets, but in the recent decade their same store sales have been decreasing while Target has built store loyalty and higher margins. It was only after the stock price crash fourth quarter of last year that Wal-Mart began to take back market share based on their everyday low price campaign. What are the differences in consumer views that have instilled this drastic change in store loyalty and sales?

Target

Target began under a different name, but created a store setup similar to that of Wal-Mart in the 1960’s. In recent years the company has taken a different path than that of Wal-Mart’s everyday low price, cheap appearance. Target took the variety and assortment model to a higher level by learning from mistakes that many discount stores experience. Consumers have begun to view the store as an upper class alternative because of characteristics such as cleaner floors, wider spaces, and organized racks.

Despite the fact that the company repeatedly can be seen charging slightly higher prices for identical items in comparison to Wal-Mart, the store is frequently patronized by those looking for a better experience with less confusion. Consumers believe Target has products that are fresh, original, and fashion-forward. In the years before 2008, Target created a high class experience while still maintaining competitive pricing on staple goods. These higher prices may be attributed to the higher level of service or nicer appearance of the stores products. This all serves in creating a unique experience that is overlooked in the Wal-Mart business model.

In recent months this strategy has been killing the company revenue model. In our time of financial crisis people can now be seen saving as much as possible and striving for better deals. The upper class atmosphere found within the store has created a negative attitude for consumers looking to keep costs as low as possible. The presence of, “anyone wearing a NASCAR shirt, purple sweat pants, and pink fluffy slippers”1 is now weighed less in comparison to higher prices in consumer minds.

Wal-Mart

Wal-Mart, also since the 1960’s, has been a power house in the retail industry and is known as a cut throat company that is destroying small town America. Consumers believe Wal-Mart does not put customers first and is merely trying to boost sales with each action. Cheaper floors and less aisle space have led consumers to believe the store maintains a low price bottom line for every product.

Consumer testimony shows that Wal-Mart is in fact over-crowded, short-handed at check out, and often full of people who pay little attention to their public appearance. Many Americans will probably answer in accord that a trip to Wal-Mart is nothing special to prepare for.

One area where Wal-Mart exceeds is its small town dominance over the years. American society has been quick to point out that this strategy often kills mom and pop stores, but consumers can justify this with the amount of convenience in acquiring more than a few days’ supplies under one roof and in record time.

In recent times many Americans are abandoning the Target strategy of high class atmosphere and jumping back on the Wal-Mart bandwagon in an effort to save money. Despite the fact that Targets prices are on average within 3% of Wal-Mart’s1, there are noticeable revenue differences based on the atmosphere that customers are supporting.

Similarities despite Consumer Thoughts/Behavior

Both Wal-Mart and Target are guilty of treating there workers poorly, stock piling large amounts of product, and strategically pricing so as to eliminate competition. The consumer preferences and labels towards both stores have lost value over time.
1 - http://blogs.moneycentral.msn.com/smartspending/archive/2008/03/28/wal-mart-vs-target-which-is-better.aspx