Wal-Mart and Target are this holiday season's hare and tortoise. The question remains, which company will cross the finish line in first place?
After last year's stumbling start the day after Thanksgiving, Wal-Mart Stores Inc. this time bounded into the lead, luring customers with a celebrity-laden ad campaign, early hours and dramatic deals on laptop computers and plasma-screen televisions.
Target Corp., which had outpaced Wal-Mart in sales growth every month for more than a year, got off to a rocky start this holiday, advising Wall Street before Thanksgiving that sales were likely to be lower than expected.
With this week's reports on November retail sales showing a shift toward discounters and away from high-end department stores and specialty chains that were expected to thrive during the holidays, the face-off between Wal-Mart and Target is shaping up as a key indicator of how generous shoppers will be this season.
Bentonville, Ark.-based Wal-Mart dwarfs its rival -- and every other retailer -- in terms of sales, but Target's higher style, more affluent customers and strong growth are the envy of the industry. Wal-Mart executives, looking for ways to increase sales and profit, have promised to win customers by offering their own version of what's been called "mass with class."
"Wal-Mart demonstrated over this last weekend that they can and will get very aggressive in prices. They are the price leader; they have a cost advantage and an expense and scale advantage that no other retailer has," said Jeffrey Klinefelter, an analyst with Piper Jaffray & Co. in Minneapolis.
"However, where Target is currently winning the battle is with a higher-income customer and in more discretionary categories, like apparel and home and parts of electronics -- that, right now, is advantage Target."
Wal-Mart's efforts led it to a rare gain in sales over Target in November at stores open at least a year, a key measure of growth in retailing. Wal-Mart's discount stores posted a 3.8% gain compared with last year; including strong sales at the company's Sam's Club warehouse stores, Wal-Mart's total U.S. same-store gain was 4.3%.
Minneapolis-based Target, which is one-sixth the size of Wal-Mart in revenue, reported a 2.6% increase in same-store sales, in the middle of its revised projections but still off its earlier forecast of 4% to 6%.
