Cents or sentiment: Wal-Mart or Target?
- Article by: JOHN EWOLDT
- Star Tribune
- April 22, 2009 - 10:15 AM
Fans of Target and Wal-Mart go together like Archer Farms oil and Great Value water. They don't mix well. Probably the only thing that aficionados of Target and devotees of Wal-Mart can agree on is that Wal-Mart's prices are generally lower.
But as the economy has soured, many of Target's devoted legions are doing the unthinkable and spending their dollars at Wal-Mart. After years of winning the monthly same-store sales race, Target's star has dimmed while Wal-Mart shines brighter than all competitors. Many shoppers nationwide have traded in the red cart for a blue one (and Wal-Mart's recent TV ads brilliantly illustrate that), but here in Target's back yard, customers aren't switching teams. Yet.
"There is resistance to Target's local customers moving to Wal-Mart," said David Brennan, co-director of the Institute for Retailing Excellence at the University of St. Thomas. As you move farther away from Minnesota, Target stores don't do as well, he said, especially in smaller markets.
In the short term, Target's customers will remain loyal as the company cashes in on its stellar reputation as a generous supporter of the local community, said Britt Beemer, chairman of America's Research Group, a consumer research firm in Charleston, S.C. "But it may not carry weight indefinitely," said Beemer.
Twin Cities shoppers I spoke to at both discounters weren't budging, for now. While shopping in Wal-Mart in St. Paul, Angela Daniels of Minneapolis said, "Target is for the middle class. Its employees are stuck-up. Wal-Mart is cheaper." A mere block away at Target, Natalie Olson of Woodbury weighed in. "Wal-Mart is junky. Target is cleaner and classier," she said.
We wondered how much Target shoppers can save if they switch. According to a recent price comparison, shoppers can save 4 to 5 percent at Wal-Mart overall. That's the difference in my shopping cart of 30 items. But half of the items were only a few pennies apart.
Wal-Mart kicked butt on a few items such as GE lightbulbs, 3M sponges, Lay's potato chips and a 2-liter bottle of Coke, making the total price difference seem more dramatic than it is. A family spending $1,500 a year at Target would save about $70 by switching to Wal-Mart, hardly a slam dunk. But shoppers can expect to save more if they buy most of their groceries at a Wal-Mart Supercenter. According to Twin Cities Checkbook, a family spending $150 a week on groceries would spend about $700 less per year at a Wal-Mart Supercenter than at a SuperTarget.
My price comparison was done two weeks ago at the SuperTarget and Wal-Mart stores a block apart on W. University Avenue in St. Paul. You'll typically get the lowest prices when the two discount behemoths are in close proximity, like on University Avenue or in Maple Grove.
While low prices rock in tough times, Wal-Mart's overall shopping experience doesn't evoke the warmth and enthusiasm that Tar-zhay's shoppers feel. Consumers shopping at Target love the experience; Wal-Mart's shoppers love the low prices. In Consumer Reports' May issue, 79 percent of Target shoppers surveyed were satisfied compared with 68 percent of Wal-Mart's customers. But Beemer said that could change as Wal-Mart remodels its stores.
Stacy Clay of Bloomington can't wait for the new Wal-Mart Supercenter to open in her hometown. She shopped at the Bloomington Target last week, but only because the Bloomington Wal-Mart is closed during the expansion. "Target is cleaner, but I miss the savings at Wal-Mart," she said.
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