On the retail side, a lifetime of lessons can be learned by examining the performance of retail giants Wal-Mart (NYSE: WMT) and Target (NYSE: TGT). Though complex, the story really comes down to pricing.
The mistake made by many is to keep prices too high for too long. As is the case with Target. Having won the game during the boom times, Target faced a very tough decision earlier in the year when the economy was starting to weaken. The question they faced was whether or not to keep prices steady or lower them to keep and attract customers?
So far, Target has decided to keep margins steady as much as possible by leaving prices alone. You can't blame them for that given the years spent building the higher margin value model that delivered huge profits. The result of the strategy is not pretty. Target has been losing the battle to Wal Mart, and it shows in their stock prices. Target is down more than 40% whereas Wal Mart is up double digits.
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