"From 2003 to 2007, Target's annual same-store sales growth averaged 4.6%, while Wal-Mart's clocked in at 2.9%. Over the same period, Target's annual profit growth averaged 16%, while Wal-Mart lagged behind at 10.3%." (Gregory 2009). In response to the threat of Target, Wal-Mart was striving to go upscale, making encroachments into the organic food market and luxury goods. In 2005, "at a 203,000-square-foot test store in Plano, Texas, an upscale suburb of Dallas" Wal-Mart was "showcasing expensive jewelry, $500 bottles of wine, plasma TV sets and other expensive items" to compete with Target's affordable and edgy style of chic (Van Riper 2006).
But although Wal-Mart never commanded the organic, clothing, and home and beauty product glamour of Target, its fortunes have improved. While "Target's profits last year dropped a stunning 22.3%, to $2.2 billion. Wal-Mart's 2008 bottom line rose 5.9%, to $13.5 billion" (Gregory 2009). This is largely attributed to the fact that "Target devotes some 40% of its shelf space to home and apparel items, which are struggling, while setting aside less than 20% for consumables like food, health items...
Wal-Mart sets aside 45% of its space for consumables" (Gregory 2009). In the words of one consumer: "Wal-Mart sells what you need to have…as opposed to what you want to have" (Gregory 2009). Wal-Mart purchases are, by and large, not impulse buys, and consumers that once bought their groceries at Whole Foods or Costco are now shopping at Wal-Mart, and Gap shoppers are buying their children's clothes at the mega-retailer -- if they are buying clothes at all.
Works Cited
Gregory, Sean. (2009, May 14). Wal-Mart vs. Target: No contest in the recession. Time Magazine. Retrieved April 26, 2009 at http://www.time.com/time/business/article/0,8599,1885133,00.html
Gross, Daniel. (2009, February 26). The Wal-Mart puzzle. Slate.com. Retrieved April 26, 2009
at http://www.slate.com/id/2185221/
Tasini, Jonathan. (2009). Wal-Mart: Recession ambulance chasers. The Huffington Post.
Retrieved April 26, 2009 at http://www.huffingtonpost.com/jonathan-tasini/walmart-recession-ambul_b_83799.html
Van Riper, Tom. (2006, August 16). Wal-Mart goes…
