This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and watch out for more Battle of the Brands posts.
America use to have the battle of Sears vs. Kmart back in the 1970s and 1980s. Well, both are now combined into one entity named Sears Holdings Corp. (NASDAQ: SHLD) which, frankly, is still struggling for its identity. The new king of the hill from a revenue perspective is Wal-Mart Stores Inc. (NYSE: WMT). No question, with revenues this fiscal year ending January 31, 2008, expected to be $380 billion, Wal-Mart is the behemoth. The largest retailer in the world, period. But I wouldn't touch the stock. The comment most attributed to Wal-Mart is "it's tired." The stores look worn and the shopping experience arises more out of necessity than desire. Also, with a $200+ billion market capitalization, moving the needle even just 10% is quite challenging.
Why bother with a company that will have a very difficult time growing its revenue and earnings base? Why bother with a company that is being attacked, successfully, on both sides of its key businesses: the discount retailer and the warehouse stores? Why bother with a concept that has saturated its market with more than 3,200 stores in place? The only sure-fire way to grow the earnings base is through same-store-sales monthly increases, and yet, Wal-Mart is struggling in this capacity. The answer is not more stores, and pricing increases go against the Wal-Mart credo of everyday low prices. Sure, shareholders of the past 30 years have been exceptionally rewarded and Wal-Mart is the quintessential American brand, but there is a far better and exciting story for shareholders going forward. That story is the rising titan, Target Corp. (NYSE: TGT).
Target is a refreshing, exciting concept with creative and skillful advertising. The big red-target sign is now totally ubiquitous with Target. In fact, Target recently received a patent for the shade of red used in its logo.The fashion offerings are not Nordstrom's quality, but they are innovative and very popular. The shopping experience at Target is pleasant and unhurried. The stores are brightly lit, clean, and clear of clutter. The store count is 1,488 in the United States, with room to double that base. Target has beaten Wal-Mart on monthly same-store sales 25 of the last 26 months. It's no accident. The Target customer is from every socio-economic background, and Target has very successfully implemented the Target Visa card. The credit operations are profitable and becoming the goose that lays the golden egg. Customers are loyal to both the store and using their Target credit card.
Target is looking for revenues this fiscal year ending January 31, 2008 of $65 billion and earnings per share of $3.60 to $3.65, with excellent growth for January 2009: revenues of $73 to $74 billion and earnings per share of $4.12 to $4.15.
Target is fast becoming the choice for consumers, but it should also be clear choice for investors as well.
Georges Yared is the author of Stop Losing Money Today and Baby Boomer Investing. Please visit www.georgesyared.com
Be sure to vote in our poll for Target or Wal-Mart as your preferred brand, and let us know why you love it in the comments. Results of all Battle of the Brands match-ups coming soon.
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Reader Comments (Page 1 of 4)
4-06-2007 @ 10:33PM
Fran Pipkin said...
It seems to me that Walmart has lost its ability to serve its customers. Every day the employees abandon the sales floors to man the registers and push the carts all the while the stores are filthy and the shelves are empty. With the rantings of "I hate this store" comming from the lips of almost every person shopping there its a wonder that they stay in business at all. Yet they keep comming back.
4-06-2007 @ 11:15PM
Lisa said...
This is propoganda why bother with a company like America Online or Verizon
4-09-2007 @ 12:38PM
Tim Rossi said...
I was in a Wal-Mart on Saturday night in Sturbridge, MA, and, while I was waiting in a very long line, I looked around and asked myself, "What am I DOING in this dump?" Unfortunately I do not have a Target near me. Otherwise, I ordinarily would not be caught dead shopping at Wal-Mart. I know more and more people with the same opinion. Wal-Mart has a serious branding/customer service/store cleanliness issue to address. Most Target stores are clean, attractive, easy to shop and, best of all, I don't feel "dirty" when shopping there. They're trend-right and have great home decor offerings, as well as the great prices on things I need that I currently get at Wal-Mart. As soon as a Target opens near me, it's buh-bye Wal-Mart FOREVER.
4-10-2007 @ 3:04PM
Steve Erickson said...
Target has been and in my opinion will continue to be a great investment for patient investors. Target stock has been one of my core holdings in our family retirement and investment accounts. Target stores are a pleasant place to shop and are priced very competitively. Target's management continually changes the product mix to provide the stores with profitable sales. Most importantly they are not built out in the USA with the opportunity to continue to grow their sales as they move into new markets. They also have an opportunity to continue to grow supermarket sales as they add additional Super Targets. As a MN resident it has been fun to watch Target's growth.
4-18-2007 @ 11:07AM
Lonny said...
Let's be sure not to confuse someone's brand preference with actual spending habits. My knee-jerk reaction to the Target/Wal-Mart brand question was in favor of Target. I like it better, but I spend more of my hard earned money at Wal Mart because the price difference is larger than the difference in quality.
4-19-2007 @ 7:59AM
Angel said...
I think I buy more home care products and things of that nature at Walmart because it doesn't matter where you buy Windex...it just matters what you pay for it. But, when you want quality, style, and a better "feel" about what you're getting, I definetly go with Target. I actualy enjoy shopping there and I don't feel so low brow. Our Walmart is filled with cranky, minority (mostly Puerto Rican) workers who would rather stand around rattling off in spanish to their buddies then help you with something. Does anyone have a reason why you shouldn't be able to find a single person to help you in an entire Super Walmart ?? As soon as they see you coming, they all disapper. I had one guy pretend not to speak English but then again...he might not've been pretending. The customer service is horrible and it seems as if neither the customers nor the workers even want to be there.
4-19-2007 @ 8:31AM
Rosemary Mavellia said...
I positively hate to go to Walmart, I hate the filth, the clerks who hide when you need them, the shopping carts are so filthy, I carry hand sanitizer whenever I go there, in fact were it not that Target does not carry fabrics, wools for knitting etc., I would never in my life enter a Walmart store again. When I think of how many small stores have been put out of business by this conglomorate, it makes me ill.As for the jobs that Walmart has created, these people don't want to work, in any other workplace, they would not last one month.I think the municipalities have to re-think when they are approached for permits to open new Walmarts, they become run down in no time, I never see them improve them after that and what is left are eyesores.
4-19-2007 @ 8:25AM
Shane said...
The more I learn about Walmart, the less I shop there. And when I do shop there, I feel guilty. The employment practices disturb me. Their business practices upset me. There are also eight open lawsuits against the chain for discriminating against handicapped customers with service dogs.
I prefer to do business with people who have better ethics.
4-19-2007 @ 9:33AM
Stacy319 said...
I see all these posts from people that seem to hate Walmart, but they still shop there. I hate Walmart and all of their practices and absolutely refuse to shop there at all. If more people stood up for what they believe in then Walmart would be forced to change the way they do business.
4-19-2007 @ 9:07AM
Jon Salhus said...
I am tired of same old Walmart "price-breaker" signs, dingy-dirty stores and piles of messy merchandise. I am impressed with Target's innovative and creative advertising, neat-clean stores and attractive merchandising displays. Both are lacking in helpful personnel though Target does a much better job than Walmart. Target also moves customers through checkout with more efficiency and much less bitching... But the truth of the matter is that Walmart is still less expensive. I'm sure they can and will improve the Walmart shopping experience. We need to have them compete with each other, but I'll patronize Target and buy Target stock while still shopping Walmart's lower priced items.
4-19-2007 @ 9:23AM
Robyn said...
I totally agree with those who say Wal-Mart is dirty. I haven't gone into one Wal-Mart that was even close to the cleanliness at Target. The organization at Target is much easier to navigate as well. When I shop at a big store such as Target or Wal-Mart, I am looking for good deals, for the most part the are both in sync price wise, but as for quality (clothing, food, products, etc.) I chose Target WAY over Wal-Mart.
4-19-2007 @ 9:32AM
Abell said...
Plain and simple. Want to save money and find everything you need. Shop at Wal Mart.
4-19-2007 @ 10:35AM
Cecilia said...
I detest going to Wal-Mart. However, when I am out of a much needed item, whether it be toiletry, food or what have you, I resort to shopping there simply because Target is closed after a certain time.
The ambiance at Wal-Mart is absolutely disgusting. You can't make your way through the aisles because they have boxes of merchandise stacked in the way, or the merchandise itself is sprawled all over the floor. No one that works there seems to give a crap when it comes to customer service. It's a cold day in hell if a cashier even thanks you after you've spent your hard earned money there and valuable hours of time just waiting in the lines. They usually seem to consist of women who are about 9 months pregnant and ready to burst. And don't bother complaining to the manager, he's no better and nothing will ever change.
My experience at Target has far exceeded anything Wal-Mart could ever hope to do. The stores are clean, the employees are well groomed and seem to actually want to help a customer when needed. An employee who does their job - what a concept! I only wish that Target were open later than they are so I don't have to resort to shopping at Wal-Mart.
4-19-2007 @ 11:05AM
Barb said...
I am a high school graduate and have some college. I worked for Walmart for 2-1/2 years and believe me, it's all butt kissing and brown nosing, that's the only way I got the schedule I wanted, thank God, I am out of there. To me it's nothing more than working in a sweat shop. Management treat's you like you are the lowest life on earth and even tell you, you can be replaced. And that crap they make you do in the morning after a meeting...the "Walmart Cheer", I swear, if a psychologist was in the store they would all be committed...People hate it! Poor Sam Walton would be turing in his grave if he knew his stores were being ran this way, by his greedy family.
4-19-2007 @ 10:39AM
matt said...
bought a tv at target for $700 it lasted just over 90 day warrenty
could not get any help from target at all. not even where to get the tv repaired all they would do was give me an 800 number to call at the factory but the factory did not answer the phone for a week i asked to talk to a manager at target they called their 800 number and the target cust. care gave me the same phone number i asked where do i take the tv for repair and they said you call this 800 #
and they can tell you we dont know the worst customer service i have ever had in my live i will not buy anty at target ever again
4-21-2007 @ 10:15PM
RON HARRIS said...
I am a Wal-Mart frequent shopper and enjoy shopping at our local Wal-Mart.I have read some your blogs and do agree with the cleanliness of some stores but to say this, with the thousands of customers that frequent the store, it is rather difficult to keep it clean. I have been to Target stores and found them to be not as busy as Wal-Mart and therefore can keep their stores clean and well-stocked. My family and I shop Wal-Mart 3 to 4 times a week and even sing their jingle-"Wal-Mart Only At Wal-Mart". And on a final note Wal-Mart is the only retail store that doesn't mind if truck drivers, such as myself, park in their parking lots.
As a frequent Wal-Mart shopper, we find Wal-Mart to be a good place to shop, as well as, warm and freindly people. I have read some of your comments and do agree that some stores are pretty messy but can vouch that it is not from a lack of effort. Shoppers venture Wal-Mart 3 to 1 than Target and therefore have a hard time keeping up.I am a truck driver and frequent many Wal-Mart stores and its pretty much the same-more people, more people, more people! At night Wal-Mart has cleaning crews and stockers but as soon as the sun rises, there they are-the shoppers! Target offers originality but Wal-Mart offers value!! I only shop Wal-Mart for the VALUES and not the VIEWS.
4-19-2007 @ 10:54AM
J La Fleur said...
the company Wally world has clearly got no moral leadership. they come into a smal town bring prices down untill the local mom & pop compaNIES GO UNDER THATN RAISE THE PRICES UP WHEN THE COMPETIOION IS GONE!. I was TOLD one day to use the automated check out lines. I told them " ou have mistaken me for one of your employees and I do not use the automated systems as I feel t is trying to throw away the Amereican worker. I was told " No body has lost jobs at wall mart because of these" I said maybe not, I dont believe you havvent laid anyone off wit these but lets say yu havent lain anyone off. I noticed you haven geot humans working thse positions in thier places" he had no answer for me.
when Wall World get dome supporting all the sweat shops in china and US factories have closed who will bew able to shop in there then? While we are on the subject of employees why do consumers reward comapnies for treating thier employyee so crapily? these are your bretheren out there if your company was treating yu that crappy would yu want yur company rewarded?
4-19-2007 @ 10:58AM
Cynthia Brown said...
I prefer Target because of the people factor. More trailor trash shop at Walmart.
4-19-2007 @ 8:27PM
sonny said...
I am a quality and price shopper. Walmart wins hands down. Our new Target super store has house brands that are somewhat similar in price to Walmart but not quality. Regular items at Target are priced simlar to other grocers, at least 15% and up to 300% higher than Walmart. I buy nothing but specials at stores other than Walmart.
4-19-2007 @ 11:09AM
Martie said...
I have not shopped at WatMart for several years, and also encourage my friends not to. Their practices as far as discrimination against women, overtime, health benefits, and other practices...including forcing markets to set rididulously low prices on one product, only to steer customers towards a better, more expensive item, have turned me off to WalMart forever. I would rather pay more and go to a local shop as long as they can compete) than ever set foot into a WalMart