Posts Tagged 'Walmart'

Will Target’s latest reset work?

Target’s CEO announced last week that investors should expect tough 2017 returns as the company invests in stores and more competitive pricing. Here’s my recent comment from RetailWire:

Walmart was criticized a couple of years ago for investment spending on its stores because it was likely to put a dent into short-term results. But the long-term view for WMT is brighter because of this decision, and Target is aiming for the same kind of outcome.

But Target has some specific challenges ahead that a store revamp won’t fix on its own:

1. The longstanding conflict between “cheap” and “chic”: Target needs to be more price competitive but has built its brand promise on more aspirational goods;
2. The continuing lack of traction in the grocery business, especially to drive more frequent visits;
3. The head start on e-commerce (and omnichannel) that its biggest competitors already have;
4. The company’s longstanding inability to keep its shelves and pegs filled.

I can’t overstate the importance of the last point. A trip to Target where a third of the shopping list can’t be filled is a waste of time, no matter how compelling or competitive the merchandise might appear.

Is the pendulum swinging back on early Thanksgiving openings?

I’ve argued for awhile that earlier and earlier Black Friday (or Thursday) openings are counterproductive. Here are some recent thoughts posted on RetailWire:

Some of the biggest players (Walmart, Target, Macy’s, Kohl’s, JCPenney and Best Buy) still plan to open on Thanksgiving. But the pendulum is swinging back, and the Mall of America’s announcement that it plans to close on Thursday will be a major influence on other mall operators. It seems clear that the push for earlier “early bird” hours on Black Friday (followed by midnight openings, followed by Thursday openings) has had a diminishing effect on sales — by draining any sense of urgency out of Friday morning shopping. (And the availability of goods online hasn’t helped, either.)

It’s hard for the retailers who insist on being open for Thanksgiving to be the first one to blink, but it seems clear that consumer sentiment is tugging them in that direction.

And this more recent post:

While the reports of the death of Black Friday are greatly exaggerated, there is no doubt that it’s lost importance on the retail calendar. The shift to e-commerce is part of the reason, but the bigger cause is retailers’ greediness in pushing their “early bird” hours earlier and earlier and finally opening on Thanksgiving itself.

My long experience working for a company that knew how to “nail” Black Friday tells me that the event was once as much a social occasion as a way to hunt for deals. Opening earlier and earlier never seems to result in more net sales but actually becomes counterproductive when any sense of urgency about “early birds” flies out the window.

Walmart shows modest Q2 gains

Walmart stood out from most other retailers by reporting a comp-sales gain for the 2nd quarter, instead of a decline. (There continues to be strength in the off-price segment, too.) I think part of the reason is Walmart’s success at the food and commodity businesses while Target continues to struggle. Here’s my take from a recent RetailWire discussion:

Walmart veers from underperformance to overperformance over time, and the latest “overperformance” is really only in contrast to competitors like Target. A very modest comp-store sales increase is nothing to write home about when Walmart continues to lose share to Amazon, dollar stores, and other competitors. That being said, Walmart is doing a consistently better job drawing in regular food shoppers than Target, and some of its investments in store improvements are starting to pay dividends. But a 1.6% same-store increase isn’t cause for celebration, even in today’s tough environment for general merchandisers.

Walmart buys Jet.com

Some observations (about a month late) about Walmart’s announcement in early August that it is acquiring web startup Jet.com. Here’s my comment from a recent RetailWire panel discussion:

The risk isn’t great to Walmart, considering the purchase price vs. Walmart’s scale. But the reward is definitely in favor of Jet.com’s founders and investors, who are about to become very wealthy. The real question is whether Walmart intends to keep the Jet.com brand alive or simply wants to take a competitor off the playing field.Jet.com seems to have followed the typical internet startup path of losing money while aggressively trying to build traffic and market share. But Walmart’s move makes it hard to tell if Jet’s business model is sustainable over the long haul. Let’s face it — nothing about this move changes the reality that Amazon is the alpha dog.

Organics at Target and Walmart: Who has the edge?

A brief comment (from RetailWire) follows on the topic of organic foods, and the two giant discounters’ push into the business. As usual, Target and Walmart are taking different approaches toward the category:

“Healthy for you” positioning depends on the retailer: Panera yes, Burger King no. It’s valid for Walmart and Target to take diverging paths toward selling more organics and healthy food. One chain (Walmart) specializes in “We know what you want,” while the other (Target) practices “We know what’s good for you.” In defense of Walmart, pushing organics at price points meant to stimulate further demand is providing a consumer benefit even if the company isn’t using it as a branding tool.

Is Amazon verticalizing its delivery service?

Amazon’s recent announcement about developing its own fleet of freight-carrying planes caught the attention of many, including my fellow RetailWire panelists. Here’s my recent opinion, in the context of Walmart’s similar history taking the reins of its own logistics many years ago:

There is some comparison to Walmart’s history, as Amazon works to take tighter control over its supply chain. The difference is that Walmart’s initiatives were primarily driven by lowering costs — and, in turn, by grabbing market share when they dropped prices in their stores. Over the long run, Walmart’s cost savings on logistics have not translated into better store execution.

Amazon is committed to be price-competitive, of course, but is equally driven by its brand promise of great execution. Instead of being at the mercy of second-party carriers (UPS, FedEx, USPS and so forth), Amazon would rather control its own destiny.

E-commerce at Walmart: An uphill battle?

RetailWire panelists recently discussed some statistics pointing out that Walmart’s e-commerce business is growing at a slower pace than its competitors’ — and certainly slower than Amazon, too. The question raised is whether there are underlying issues with Walmart’s business and customer profile holding it back. Here’s my take:

Two observations in the article really resonate: First, the Walmart customer target and brand profile may not align with the demographics of more successful e-commerce operations. (In other words, too downscale.) Second, Walmart is in several commodity businesses where it can be out-assorted, out-priced and out-executed by Amazon.

It’s hard for any aspiring omnichannel retailer to grow the top line with these kinds of e-commerce sales trends. It’s even harder as Walmart continues to grapple with mature sales in its brick-and-mortar stores.