Wal-Mart and Target show start of holiday price war
Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT) have started throwing punches leading up to the "official" holiday shopping season that starts on Black Friday -- the day after Thanksgiving. In quarterly results conference calls from both retailers that happened this morning, both retail behemoths came out punching and seemed smug that the public will choose them over the competition this holiday shopping season. Want to see all the nitty-gritty details? Amey Stone and myself liveblogged both results conferences this morning -- check out the Wal-Mart liveblog here and the Target liveblog here.
Both companies mentioned that toys, games and electronics were the hot holiday categories this year (as well as the most recent quarter for both), and both mentioned that they were the country's two largest discount retailers. Wal-Mart is going to use its strengths of "everyday low prices" and vowed to have "its most aggressive pricing strategy ever" to fuel year-end holiday shopping business. However, in spite of trying to move all that merchandise at rock-bottom prices, Wal-Mart warned the move could also make it miss Wall Street's expectations for fourth-quarter earnings. How's this Wal-Mart -- do you really need to lower prices that much? What's the point in holiday retail marketshare if you're going to make less profit?
I've never quite understood why some companies -- even Wal-Mart -- think that marketshare is more important that making money. Marketshare does not pay the bills, employees, satisfy shareholders (except short-sighted shareholders) or do anything else except give temporary bragging rights. I say, who cares?
Target Corp. reported a 16 percent gain in third-quarter profit, beating analyst expectations as its sales rose 11 percent. Target President Gregg Steinhafel told investors during the quarterly results conference call this morning that the retailer would compete on long-running discounts and would match Wal-Mart move-for-move -- noting that it has often matched Wal-Mart pricing before Wal-Mart advertises them in its circulars.
The game is on...
Both companies mentioned that toys, games and electronics were the hot holiday categories this year (as well as the most recent quarter for both), and both mentioned that they were the country's two largest discount retailers. Wal-Mart is going to use its strengths of "everyday low prices" and vowed to have "its most aggressive pricing strategy ever" to fuel year-end holiday shopping business. However, in spite of trying to move all that merchandise at rock-bottom prices, Wal-Mart warned the move could also make it miss Wall Street's expectations for fourth-quarter earnings. How's this Wal-Mart -- do you really need to lower prices that much? What's the point in holiday retail marketshare if you're going to make less profit?
I've never quite understood why some companies -- even Wal-Mart -- think that marketshare is more important that making money. Marketshare does not pay the bills, employees, satisfy shareholders (except short-sighted shareholders) or do anything else except give temporary bragging rights. I say, who cares?
Target Corp. reported a 16 percent gain in third-quarter profit, beating analyst expectations as its sales rose 11 percent. Target President Gregg Steinhafel told investors during the quarterly results conference call this morning that the retailer would compete on long-running discounts and would match Wal-Mart move-for-move -- noting that it has often matched Wal-Mart pricing before Wal-Mart advertises them in its circulars.
The game is on...











Reader Comments (Page 1 of 16)
11-14-2006 @ 5:43PM
Bhanu Pabreja said...
>>>What's the point in holiday retail marketshare if you're going to make less profit?
With market share comes age old rule "Economies of large scale" which means cheaper in sourcing ... better utilization of other resources which build the entire ecosystem of selling.
11-17-2006 @ 2:24PM
Beth said...
I much prefer Target over Wal-Mart. It's been a LONG time since I shopped in a Wal-Mart.
I would even go a step further in saying that I prefer shopping at smaller mom and pop shops to any of the big box retailers at all.
Walmart has cannibalized itself into this huge animal that is trying to eat up America. Not the company that was designed to serve it!
11-17-2006 @ 2:27PM
JACQUELINE said...
FOR A MYRIAD OF REASONS, I'M STICKING TO TARGET.
11-19-2006 @ 8:53PM
LEE said...
I AM GOING TO SHOP AT BOTH SINCE THEY BOTH DECIDED TO PUT ASIDE THE WORD HOLIDAY AND RETURN TO THE WORD CHRISTMAS.
MERRY CHRISTMAS TO ALL.
11-17-2006 @ 2:38PM
BOB said...
... MERRY CHRISTMAS TO ALL ...
CHRISTMAS IS TIME FOR BUSINESS'S TO SAY "THANK YOU" TO ALL ITS CUSTOMERS, FOR KEEPING THE DOORS OPEN ALL YEAR.
NOT A TIME TO PUMP UP ITS STOCK PRICES..
SUCESSFUL BUSINESS MAN FOR 50 YEARS, WORKED FOR ME.
"MERRY CHRISTMAS" WIT A BIG SMILEEE..
THANK YOU,
BOB
11-17-2006 @ 2:40PM
mark whiter said...
I don't believe target actually has to compete solely on price. In fact they can reamin a little higher and i would still shop there over wal-mart any and everyday of the week. target is cleaner, staffed better, organized, and just ove rall provides a better shopping experience. An example of my many wasted trips to wal-mart occured just over a week ago. I went in to purchase a 26" LCD television. Although they did not stock the particular model i wished to purchase, they did stock a similar model which I would have purchased, had i been able to find anyone willing to help me because of course the shelves were empty. So I left the retailer and went down the block and made my $900.00 purchhase. Although they boost the greatest logistics system in retailing, it often fails at store level to actually reach the store shelves, and if it is in th estockroom, guess what ? I have yet to see customers shopping in stockrooms!
11-17-2006 @ 2:40PM
richard green said...
i don't shop and will not shop at target, they can't give to toys for tots, how cheap is that??
11-17-2006 @ 3:15PM
mike said...
I have'nt shopped in a wal-mart in five years, i hate that store, it's always dirty, crowded, alot of crappy merchandise and uninspired employees, not to mention their employee and business practices, i have found target a much better store and a much better shopping expierience, as a previous poster stated, i do prefer mom and pop shops, but unfortunately the gorilla in the room has done away with most of them, low price is'nt everything.
11-17-2006 @ 2:46PM
dane said...
me i will shop at kmart....guess i should since i work for them.
11-17-2006 @ 2:48PM
shan said...
Walmart sucks. Weird layout and weird employees. Target all the way.
11-17-2006 @ 2:55PM
Boris Karoli said...
Target(pronounced: Tar-jay')is French owned. The French "mangez la merde". Pardon my French. I'll shop at Walmart.
11-17-2006 @ 3:11PM
Ruby said...
I will not ever shop at Target, if they can't let the Salvation Army stand in front of the store to collect money for the underpriviledged or they can't donate anything to our troops that are fighting for our freedom and allows them to have a business in this country, I do not and will not have anything ever to do with them.
11-17-2006 @ 3:02PM
Military Family said...
I loved both stores until I found out that Target doesn't support the military. They say they don't support the war but if you don't support the war you do not support those over there fighting. Any company that cannot allow the Salvation Army to have the bell ringers or a Toys for Tots box is completely un-American and should not be allowed to operate in this county.
11-17-2006 @ 3:03PM
JOHN STACK said...
NO MATTER HOW IT TURNS OUT, WALLMART IS celibrateing the birth of christ ! not winter snowflake, or happy rodolph and friends think about it!!
11-17-2006 @ 3:03PM
alice said...
I will not shop at Walmart, they support the gay community and that is wrong in my estimation
11-17-2006 @ 3:04PM
Darryll A. Devine said...
WalMart once was customer friendly; after our recent episode in a Henderville, North Carolina store, I will avoid Wally World totally. Management says, "Oh, well." Corporate does even bother to acknowledge what Management did was wrong. Can you imagine being in a line waiting for a PS3, having a list of names, then having the Manager start a new line, disregarding the other line completely, several hours later...and seemed to know almost everyone in the new line, yet no one in the old line? Hummm. Shame on WalMart, they should apologize. Shame on Management, they ought to be fired and set out in the cold line those who weathered the rain and cold weather, buying things in the store. Seems the Bosses decision even caught the Electronics folks off guard..didn't see any employees in the original line...how many were employees or relatives or friends of the Boss in the new line? The people who camped at Target were treated well by Management there....little things make BIG difference. WalMart has gotten a bit too calloused!
11-17-2006 @ 3:05PM
Bren said...
I can't stand going into a Walmart. The different ones that I have been in are always dirty, messy, run down looking. I also agree with another poster that they have weird employees. They always seem grumpy. The atmosphere is - for lack of a better word "gross". Target is much cleaner and the employees are more friendly. Granted Walmart does usually have lower prices. Target is my choice. I would rather spend a few more dollars to shop in a better admosphere.
11-17-2006 @ 3:07PM
alice said...
I will not shop at walmart, they support the gay community. That is sinful to me.
11-17-2006 @ 3:08PM
LOU SANDOVAL said...
I HAVE BEEN A WALMART SHOPPER FOR A LOT OF YEARS, BUT LATELY I HAVE BEEN GOING TO TARGET, SIMPLY BECAUSE I SEEM TO BE FINDING THINGS I WANT EASIER, AND IF I DON'T THERE ALWAYS SEEMS TO BE SOMEBODY TO HELP ME, I CAN'T SAY THAT WITH WALMART ANY MORE, APPARENTLY THE BIGGER YOU GET THE LESS YOU HAVE TO RELY ON CUSTOMER SATISFACTION, REALLY SAD ISN'T IT ?
11-17-2006 @ 3:34PM
Jean said...
I would shop at at Target any day over WalMart. Walmart is trashy,dirty and the isles are way to crowded. And for the comment that Target does not give to charity. Go in a Target and ask them and you would be amazed at what they give to. They just don't advertise it like other stores. Target could just keep there prices the same and I would shop there. Target is usually right on the same prices as Walmart. Just depends on what you are getting.
Target I have heard also is very good to their employees. Merry Christmas!!