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It's old news that we are now facing the economic crisis of our lifetimes. It has not been this bad since the Great Depression. How we react as individuals and managers of companies will go a long way in determining how deep into the abyss we go. When we look back we will learn some very important lessons that should help us going forward.

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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What companies can learn from Target originally appeared on BloggingStocks on Fri, 05 Dec 2008 17:05:00 EST. Please see our terms for use of feeds.

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