COLUMBUS, OH -- Thanks to strong holiday sales, for the first time in 18 months Target has surpassed its mega-retail rival Wal-Mart.
AdAge.com reports that December sales results have “vindicated Target” as the winner of holiday shoppers, despite Wal-Mart’s strong November performance. Target reported comparable-store sales of 4.7 percent on sales of $8.4 billion in December, notes the news source, compared Wal-Mart’s “weak showing” of 2.2 percent on sales of $40.8 billion.
Analysts are citing a few reasons for Wal-Mart’s failure, such as a weak advertising campaign, “Home for the Holidays,” featuring celebrities. “A commercial with a mom talking about getting bargains at Wal-Mart and making ends meet probably would have worked better than seeing Beyonce Knowles open a present,” Ken Perkins, a research analyst with Retail Metrics, told AdAge.
“Wal-Mart wants to go upscale and capture more of Target’s market, but Target is fairly well entrenched,” Perkins added.
Wal-Mart’s ad tactic to reach more upscale consumers may have failed in the short-term; however, it may be a sign of the mega-retailer’s long-term strategy. Joseph Beaulieu, a retail analyst with Morningstar, told the magazine, “The advertising is just way ahead of the in-store changes,” noting the changes made from the typical Wal-Mart store to the next-generation prototype store he visited, which featured expanded electronics and women’s apparel sections.
“They are trying to both improve their image and the actual reality, and it takes money to do that and time. A large store base works against them. It’s going to take years of dedicated effort in both branding and merchandising and store upgrades to change consumer’s minds,” said Beaulieu.
As Wal-Mart slowly shifts course, Steve Spiwak, an economist with Retail Forward, told AdAge that it’s important to note billions are still being spent at the world’s largest retailer and the entire retail sector remains surprisingly healthy.
“Today’s results really only call into question whether those ads resonated with their customer base,” said Spiwak, noting that it is critical for other retailers to stake their territory as Wal-Mart implements transitions.
“Consumers are getting picky about where they shop and may only spend money at their favorite retailer,” Spiwak added.