Target’s Black Friday bargain hunters likely flocked to Walmart
Turns out, consumers like buying cheaper products... Swifties aside, of course.
Retailers kicked off the Black Friday weekend excited to take advantage of reportedly robust consumer spending… but recent earnings releases from some big-box stores revealed diverging fortunes, showing that shoppers are getting pickier about what they buy and where from.
Walmart stood out as the clear winner of retail America, beating analysts’ estimates this quarter with a 5.3% bump in comparable sales. Meanwhile, Target’s comparable sales looked less healthy, at just 0.3% — the 10th straight quarter that comparable sales at “tar-zhay” have lagged behind Walmart. Target shares slumped more than 20% on the news, while Walmart stock hit a record high in the wake of its more optimistic report.
Expect less, pay more
The vastly different Q3 results signal that some of America’s retailers more focused on discretionary purchases are feeling the pressure, as shoppers increasingly look for affordable, essential items. In an effort to stand out from its cheaper rivals, Target rebranded itself as a more fashionable alternative to megastores Walmart and Costco, relying on consumers who are comfortable loading their cart with things they want, but don’t necessarily need.
However, Target’s bullseye model is losing appeal across generations and income levels. On the back of viral social-media videos, younger shoppers are flocking to Walmart to find #dupes for expensive homeware and clothing. And higher-income shoppers, whom Target could previously rely on, are no exception: a staggering 75% of Walmart’s market-share gains this quarter came from households earning more than $100,000 a year. Beyond this, Target customers are growing tired of “items missing on shelves, long checkout lines and products locked up to prevent theft,” per The Wall Street Journal.
Simply put: Walmart is drawing sales away from Target in the “cheap chic” categories it’s best known for… and even a hotly anticipated collaboration with the Taylor Swift — which has already sold out at several branches and become the retailer’s highest-selling book of the year — might struggle to pick things up in the long term.
