retail news in context, analysis with attitude

The Wall Street Journal this morning reports that there are concerns in the investment community that Target, by emphasizing groceries and low prices as a way of making inroads against Walmart, has actually lost some of the “cool factor” that made it different. “These were good moves during the recession,” the Journal writes, “but the pendulum may have swung too far, attracting more medium- and low-income shoppers at the expense of the higher end shopper. While food can drive shopping trips, profit margins are slim.”


The Journal continues: “Target shoppers are stocking up on toilet paper and foodstuffs, but the stores are having a hard time enticing customers to spend money on stylish clothing and home goods - which are more profitable and make up more than 40% of annual sales. It was these apparel and decorating items - mixing mass with class - that set Target apart and allowed it to be one of the few discount chains to thrive against Wal-Mart Stores Inc.'s relentlessly low prices.”
KC's View:
For the past year or so, a lot of the media coverage has been about how Target was successfully competing against Walmart on prices and food.

Wouldn’t it be funny if Walmart actually was playing “rope-a-dope,” letting Target punch itself out in the low price grocery segment until it lost the “cool” credibility that actually was harder for Walmart to compete with.