Same-store sales at Walmart’s U.S. stores climbed 6.4% in the second quarter while rival Target’s declined 5.4%, although both discounters warned that consumer spending remains challenged.
Doug McMillon, CEO of Walmart, said on a call with analysts, “Jobs, wages, and pockets of disinflation are helping our customers, but rising energy prices, resuming student loan payments, higher borrowing costs, and tightening lending standards, and a drawdown in excess savings mean that household budgets are still under pressure.”
Brian Cornell, Target’s CEO, told analysts that inflation on food, beverage, and other essentials was “causing these categories to absorb a much higher portion of consumers’ budgets. In addition, consumers are choosing to increase spending on services like leisure travel, entertainment, and food away from home, putting near-term pressure on discretionary products.”
Cornell further said the rollback of pandemic-relief boosts, including stimulus payments, enhanced child care tax credits, and the suspension of student loan payments, “presents an ongoing headwind that consumers continue to manage.”
Also playing a role in Target’s underperformance — its first decline in six years — was a “strong reaction” to its pride assortments that led to some conservative shoppers vowing to boycott the store.
Walmart is believed to have benefited from its high penetration in grocery, representing 59% of sales at the Walmart U.S. segment in 2022 versus 21% at Target. Many also believe Walmart benefits from a stronger value message that drives share gains across income demographics. John David Rainey, Walmart’s CFO, told analysts, “Our value proposition is resonating with customers.”
Target lowered its full-year outlook as it also expects mid-single-digit comp declines in the back half of the year due to continued softness in discretionary purchases, with the upcoming resumption of student loan repayments further straining consumer spending.
Walmart raised its full-year forecasts due to the above-plan performance. McMillon said he was particularly encouraged that general merchandise sales trends improved sequentially in the quarter and that back-to-school selling is off to a strong start. He said, “Typically, when back-to-school is strong, it bodes well for what happens with Halloween and Christmas and GM in the back half.”
FAQs
Target focuses on value on entertainment and lifestyle products which is more discretionary and affected more by inflation. When consumers are facing inflation pressure plus less optimistic about future income, Walmart is more the go to than Target.
Why is Walmart more successful than Target? ›
Walmart's product mix is more focused on staples than Target. Walmart has a full grocery store and a value proposition centered around low prices. So, naturally, it was better prepared for present market conditions. But Walmart also did a better job managing inventory and forecasting buyer behavior.
What does Target do that Walmart doesn't? ›
Walmart's main rival, Target Corp (TGT), operates approximately 1,800 stores in the United States. Target has utilized a low pricing strategy similar to Walmart, but is more focused on the e-commerce platform, experiencing over 30% of e-commerce sales growth in 2018.
Who has better prices, Target or Walmart? ›
Overall, Target offers a more pleasant and upscale shopping experience with better quality products compared to Walmart. However, Walmart consistently has lower prices on staple items, so it's better for budget-conscious shoppers.
Why do people love Walmart? ›
Walmart U.S.
Today's customer seeks the convenience of one-stop shopping that we offer. From grocery and entertainment to sporting goods and crafts, we provide the deep assortment that our customers appreciate — whether they're shopping online at Walmart.com, through one of our mobile apps or shopping in a store.
What is the major reason behind the success of Walmart? ›
Walmart became the world's largest retailer primarily because they were able to offer a broad range of products, were able to efficaciously leverage their ample potent competitive advantages, were able to rapidly expand into an exorbitant amount of international retail markets, were able to offer an exorbitant amount ...
Why is Walmart thriving? ›
Revenue and earnings per share beat expectations, and Walmart says it's making inroads with high-income shoppers. The company has been trying to lure them in with new, trendier products and faster delivery of online orders. Some high-end shoppers turned to Walmart during the pandemic.
Does Target treat their employees better than Walmart? ›
Employee Ratings
Target scored higher in 8 areas: Overall Rating, Culture & Values, Diversity & Inclusion, Work-life balance, Senior Management, Compensation & Benefits, CEO Approval and Recommend to a friend. Walmart scored higher in 1 area: Career Opportunities.
Is Target more ethical than Walmart? ›
We have found Target, Walmart's competitor, to be a much better example of corporate social responsibility. Target has never been involved in protests or litigation, as Walmart commonly is. Surprisingly, Target does not pay its employees more, on average, than Walmart does. Target may even pay less.
Do you make more money at Walmart or Target? ›
Employee reviews indicate Target has a better culture and pays a higher salary and offers better benefits, but Walmart offers more opportunities to climb the career ladder. Short-term employees may prefer Target to Walmart, but Walmart offers long-term promotions.
Our editor went to each retailer's website, looked up each item on the supply list and sorted the search results by price to find the cheapest version of each item. Using this method, Target's total was $64.69 for all 21 items. Walmart was very close at $66.04. Target — by a small amount.
Does Walmart honor Target prices? ›
The first is whether or not Walmart will match the price of competitors. Unfortunately, for those in the above example asking "Does Walmart price match Amazon?" or "Does Walmart price match Target?", the answer is no. Walmart does not match the prices of any of its competitors.
Is Amazon or Walmart cheaper? ›
Overall, Walmart has historically had lower prices than Amazon. Still, if you're shopping for a big-ticket item, like a refrigerator or TV, it's best to do your own research on pricing between the retailers.
Why is Target so much nicer than Walmart? ›
From the availability of staff, cleanliness of the store, and plentiful checkouts, Target is top-notch in my book. Moving through Target was also easier compared to Walmart, with less dodging of shopping carts and little to no bottle-necking from store staff restocking shelves.
Are Walmart employees happy? ›
At Walmart, 72% of employees said they had a great workplace compared to just 57% of employees who said the same at a typical U.S. retail company.
Who is Walmart's biggest competitor? ›
Amazon. Without a doubt, the Seattle-based eCommerce retailer is Walmart's top competitor right now. As of 2022, Walmart's total equity is $91.891 billion. For the fiscal year 2022, the company's revenue increased by 2.43%, reaching $572.745 billion.
Why is Walmart better than its competitors? ›
In addition to building a reputation for low prices, it also maintains strong processes in terms of logistics, supply chain management, and operational efficiency. According to MBA Skool.com, in 2022, Walmart Inc was considered the world's most successful retailer with over 11000 stores.
Why is Walmart supply chain so successful? ›
Leveraging Advanced Supply Chain Logistics Technology. Since its inception, Walmart has been utilizing the power of technology to streamline their supply chain process and give customers the lowest prices possible on products and services. And behind it was the idea that collaboration was the key to success.
Why Walmart has had most of its international success? ›
Acquisitions enabled. Explain why Walmart has had most of its international success by entering country markets through acquisition. Acquiring an existing retailer in a country allowed Walmart to begin with managers who understood the local culture and the existing distribution system.
Is Walmart better to work at than Target? ›
Employees suggest Target has a better culture and pays more, but Walmart offers more opportunities to climb the career ladder. Consider using Google Jobs to search for career listings.
