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Retail Landscapes: Walmart vs Target

When I think about current events and the changing landscape of retail, I pause to consider two of the undisputed leaders in American retail: Target and Walmart. While I continue to work from home during these much-maligned unprecedented times, I have given a lot of thought to how these retailers are adapting as well. That is most likely a result of me reinvesting in our home space to accommodate two adults and three kids—all of whom need their own dedicated spaces for work, school, entertainment, and more. I miss milling about brick and mortar stores like Target and Walmart looking for all the things I need (and all the things I didn’t know I needed until I saw them in the store). But I have found a way to support retailers and meet my family’s needs all while responsibly social distancing.

My shopping has focused on three key categories that both Walmart and Target share: Consumer Electronics (CE), Home Furnishings, and Small Appliances. All three categories have played a vital role in sustaining our family’s quality of life during quarantine. The acceleration of curbside pickup means that I have made countless online orders over the last several months that gave me the freedom to arrive onsite and receive my goods without ever leaving my car. Walmart and Target have had to think fast on their feet to forge new paths to meet consumers’ needs. Read on to find out how they stack up against each other in these competitive categories.

CONSUMER ELECTRONICS

Walmart’s dominance over Target is uncontested given their share difference – Walmart’s market share is nearly five times that of Target’s in consumer electronics.  Walmart’s share continues to increase, boasting gains in 5 out of the last 6 quarters. The brand mixes for both retailers has two brands that share the top three spots for each: Samsung and Sony. Sony wins the highest dollar share for Target and comes in second for Walmart; Samsung leads the brand mix for Walmart and takes second place for Target. In addition to selling significantly more Sony branded CE products than Walmart, Target also sells significantly more Apple and Nintendo. When looking at CE purchases made online, Nintendo jumps to the number one brand for Target, significantly outselling Walmart. Samsung maintains its lead position for dollar share at Walmart regardless of whether the purchase was made online or in store. Other than myself, just who has been shopping for Consumer Electronics at these two retailers? Here are a few key differences:

  • Walmart shoppers are more likely to have only finished high school compared to the national average (That said, they also over index on shoppers with some college degree or having completed an Associate’s Degree).
  • Retirees are more likely to shop for CE at Walmart than they are at Target, but Target attracts more student shoppers.
  • Walmart over indexes with CE shoppers whose annual income is $49,999 or less, Target over indexes with shoppers whose annual income is between $50,000-$124,999.

HOME FURNISHINGS

Walmart’s share in Home Furnishings is roughly double that of Target. However, despite the strong unit share, each retailers’ overall share of consumer dollars spent is low, likely due to the affordably priced selection carried by both retailers. However, despite my significant contributions to Target and Walmart’s revenue, Target had a significant decline in units versus a year ago, while Walmart’s dollar share remained steady with year-over-year growth for the third consecutive quarter in a row.

Due to the large volume of import and private label brands, it is difficult to get a read on top brands for Home Furnishings. Home Furnishings do provide one of the greatest benefits of milling around either retailer as you (okay, I) grab those Home Furnishing impulse items. Every. Single. Time. However, when we do break down some of the brand data, nearly half of those purchasing Home Furnishings at Target classified those purchases under Target, Room Essentials, and Threshold—the latter two brands being strong proprietary brands for Target.  There are differences between Walmart and Target Home Furnishing shoppers – here’s a quick overview of the main differences:

  • Shoppers are mostly making smaller purchases—most of both Target and Walmart’s Home Furnishing purchases are $44 or less.
  • While about half of their home furnishings shoppers own their home, both retailers perform better than the industry average among renters.
  • While both Target and Walmart appeal to Millennials and Gen Z, Walmart also over indexes with Gen X shoppers. Target’s highest demographic is Millennials, by quite a lot.

SMALL APPLIANCES

Walmart tends to be consumers’ go-to for the Small Appliance category, compared to Target, despite a significant drop in share for the current quarter versus a year ago. However, a closer view of Walmart’s performance over the last year and a half shows Small Appliances increasing its dollar share in 3 out of 6 quarters. Walmart manages to hold slightly more than a third of the share as Target settles in around 8 percent for overall dollar share. Nevertheless, Target’s performance is holding steady for the category, with the ongoing national crisis having little impact on the current quarter.

Online shopping is front and center for retailers across the country, therefore it is important to understand category performance among those buying Small Appliances online as well. Walmart’s online only share for the category is almost 3 times Target’s share- 14 percent versus 5 percent for the last year. Interestingly, when drilling down to the product level, both retailers have the same top 3 Small Appliances sold online (and in-store, for that matter): Microwaves, Full Size Vacuums, and Coffee Makers. However, each retailer seems to have their sweet spot: Target sells significantly more Coffee Makers – both online and in-store, while Walmart sells significantly more Microwaves.

The brand mix for these two retailers is also different, with Walmart selling significantly more Bissel, Hamilton Beach, Hoover, and GE. The brands that make significant inroads at Target are slightly higher-end, and include Keurig, KitchenAid, Dyson, and SharkNinja. As with our other categories, here is a look at the differences in consumers buying these appliances at Target and Walmart:

  • Shoppers at both Target and Walmart are more likely to spend $89 or under for Small Appliance products. That said, consumers at Target are more likely to be spending $150+ at Target than they are at Walmart
  • Target again over indexes on Small Appliance shoppers with a college degree or some level of post-grad. Walmart over indexes for all other levels of education, but especially in high school graduates and some college.
  • Walmart over indexes with homemakers for Small Appliances, while Target over indexes with students, similar to how shopper demographics break down with Home Furnishings.

KEY DIFFERENCES IN DEMOGRAPHICS: TARGET VS. WALMART:

Many argue that these two retail leaders do not attract the same core consumers. In fact, even Walmart’s CEO is calling for his store to attract an expanded customer base by shifting their focus from lower income to higher income customers, who not only spend more, but expect more as well. Does Target have the customers they are looking for?

Overall, Walmart does draw in more customers than Target. And frequently, those customers are looking to spend similar amounts on goods and services. One thing Walmart could lean into more is the sheer volume of Walmart stores across the country versus Target. Target serves primarily urban/major metro area consumers—Walmart does a much better job reaching consumers who live in rural parts of the country.  A key advantage that Target has is its ability to attract students. Building loyalty in student shoppers, may translate to shopper loyalty for Target once they’ve finished school.

One additional note of interest: when comparing the online sales between both retailers, Target made significantly more of their sales online than Walmart did across all three categories for the last year. While not as substantial as the quantity of in-store sales, online shopping does fit with the younger, chic, urban, and trendy profile that many believe to be the primary Target shopper. While Walmart does have the higher overall volume of sales, Target seems to do a better job catering to shoppers who prefer an online experience.

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TraQline's Dave Stevenson, PH.D President & CEO
Dave Stevenson, PH.D
President & CEO

Before launching The Stevenson Company in 1995, President and CEO Dave Stevenson managed worldwide research for product development, distribution, advertising, and customer satisfaction. His roles, first as head of the marketing section of General Motors’ worldwide product planning group, and later as director of GE Appliances’ global economics and market research team, give him extensive experience in consumer as well as business to business marketing solutions. Mr. Stevenson holds a Ph.D. in statistics from Southern Methodist University.