Wal-Mart vs. Target: Whose prices are lower?

Target generally had lower prices in the first three months of the year. But April was a different story.

By MSN Money Partner May 16, 2011 11:41AM

This post comes from Jeanine Poggi at partner site The Street.

 

"Save money. Live better." Wal-Mart has based its business off this iconic motto since 2007. Prior to the catch phrase Wal-Mart operated by the slogan "Always low prices" for nearly 19 years. But starting in 2011, it appears the retail giant may have abandoned its business model of everyday low prices, further hampering its already pressured domestic sales.

 

In the first three months of the year, Wal-Mart's prices on food, health and beauty products and other general merchandise were nearly identical, if not a bit pricier, than archrival Target.

 

According to pricing studies conducted by Customer Growth Partners, a consumer research firm, January, February and March all revealed Target's prices were lower than Wal-Mart's. The monthly study, which is conducted in four states, compares products across segments, including 30 fresh, frozen and nonperishable groceries, eight household chemicals, paper and other consumables like detergent, seven health and beauty aids like shampoo and counter medicines, and 10 general merchandise items like apparel and toys.

In CGP's analysis for the first three months of the year, Target held a 0.6% price differential over Wal-Mart. This was the first time since the firm began conducting these studies in 2006 that Target displayed lower prices. In the past, Wal-Mart has typically maintained a 2% to 4% advantage over Target, says CGP president Craig Johnson.

 

If you then factor in Target's new Redcard loyalty program, which offers users a 5% discount, that price difference widens. Of course, not all of Target's customers are Redcard holders. Johnson estimates that the loyalty program makes up about 13% to 16% of sales.

 

But the usage and penetration of the Redcard appears to be increasing, as it provides shoppers at least a 5% discount on new, higher cost, but generally undiscounted consumer electronics items like Apple's new iPad 2 andNintendo's3DS.

 

Wal-Mart does not offer a similar program, which could put the company at a further disadvantage moving forward.

 

In a separate study conducted in January by Kantar Retail of just one Wal-Mart and one Target store in Massachusetts, it found that Target's prices were about 2.8% lower than Wal-Mart's. But the research firm noted that Target's low prices are more dependent on temporary sales. This means shoppers need to be willing to change brands based upon the promotions being offered in order to really notice a few extra bucks in their wallets. Post continues after video.

Groceries cost less at Wal-Mart

Two categories, in particular, where Wal-Mart remains a price leader are groceries and nonperishable home goods like paper towels and light bulbs.

 

While Target has grown its P-Fresh assortment by leaps and bounds, Wal-Mart continues to dominate the sector. About half of all of Wal-Mart's merchandise falls under the groceries segment, while CGP estimates that 15% to 20% of Target's merchandise are groceries.

According to the Kantar study, Wal-Mart was cheaper in edible grocery items by about 1% and has a 3.4% advantage over Target with non-grocery home goods.

 

Kantar purchased a basket of 13 edible items, finding price differentiations like a tub of Land 'O Lake butter for $3.48 at Wal-Mart and $4.39 at Target. It is also worth noting that five of the items Kantar studied in the category were on sale that week at Target, while just one item at Wal-Mart was a special. If these items were not on sale, Wal-Mart would have been cheaper by 6.2%.

 

Food inflation has put pressure on all grocers, but Wal-Mart has been less willing to accept increases in general merchandise from suppliers or pass along those higher costs to shoppers, allowing it to hold its title as the biggest seller of groceries in the U.S.

 

In non-groceries, a package of GE Soft White light bulbs, 60 watts, sells for $1.88 at Wal-Mart and $2.29 at Target, while a four-pack of Duracell pre-charged AA batteries are $12.19 at Target and $11.37 at Wal-Mart.

 

Health and beauty products lower at Target

Wal-Mart was easily beat in the health and beauty segments, with both CGP and Kantar saying Target has a clear edge on price.

 

In January, Target had a 7.3% advantage over Wal-Mart, according to Kantar. But the research firm noted that this was partially because nearly 30% of the items studied in the category were on sale at Target, while only one was on sale at Wal-Mart. Still, even without those sales, Target would have been 5.5% cheaper.

 

Wal-Mart has been struggling with its image among core shoppers since it removed thousands of items it deemed unprofitable from its shelves starting in 2009. While it is currently restocking some of that merchandise, the process is slow, and has left a sour taste among some customers.

 

But an even bigger concern has been the perception among shoppers that Wal-Mart does not offer the same savings it always had. "We believe that the price leadership perception, in fact, is a greater issue for Wal-Mart than destocking the fifth or sixth brands in a particular category," Johnson says.

 

As a result, Wal-Mart is poised to report yet another quarter of sagging sales in the U.S. when it releases its first-quarter results on Tuesday. This would mark its eight consecutive same-store sales decline domestically.

 

In comparison, while Target's sales haven't been anything to get overly excited about, their sales have trumped Wal-Mart's. While Target has typically been considered a high-end discounter, amid the recession the company introduced several new initiatives that have helped to erase this perception.

 

But it appears, at least, that Wal-Mart returned to its deep discount roots by the end of April. Wal-Mart's prices were 2.8% lower than Target's in April, according to CGP, but including the Redcard, Target had a 2.3% favorable edge.

 

Wal-Mart may be headed in the right direction, but based upon analysis for the first three months of the year, it looks like a sales turnaround is unlikely in the first quarter.

 

More on The Street and MSN Money:

VIDEO ON MSN MONEY

36Comments
May 16, 2011 6:51PM
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Walmart's business practices, as well as the way they treat their employees, are horrible. They bully their suppliers into lowering prices, and they consistently drive small businesses under. They tell manufacturers to make things as cheaply as possible, yet they are surprised that their products come back with lead paint. What were they expecting, a cutting of safety protocol? I'd like nothing more than to see them go out of business.
May 16, 2011 8:30PM
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Going into a Walmart makes me feel cheap and dirty.
May 16, 2011 6:53PM
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Silver Wolf, you do realize that absolutely nothing in Wal Mart is made in the U.S. anymore right? The company may have been founded on "American" principles, but it doesn't really follow its original business model anymore.
May 16, 2011 8:32PM
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I have worked for Target for years and it is not much better than Walmart, people. Low wages, very few USA based products are a plenty. As for Target's origin, SilverWolfLady49, they are not a french owned company if that is what you are insinuating by "commie". I cannot tell you how many  people come up to me and ask me that stupid question when the company has been born and bred in minneapolis through the days of the dayton department stores of the early 20th century. They are more american than walmart and for many more years.
May 16, 2011 5:19PM
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CHINAMART ( walmart ) SUCKS ! ! !    I feel sorry for the people that work there. I wouldn't go there if they gave the junk away.

May 16, 2011 7:46PM
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Newsflash: not much is made in the USA anymore other than cars and airplanes and some appliances. And all the components that go in them are made from around the world. Anyway, I started favoring Target many years ago over Wal Mart.

Target stores are cleaner, better organized, have better merchandise presentation (labels all turned the correct way - called "blocking" in grocery store stockboy lingo when I was one as a teen) and in my opinion have higher quality employees and customers. The amount of mouth breathing fat slobs and general freaks that frequent Wal Mart are perfect examples. Check out this site and see for yourself with photos taken in Wal Marts around the nation:

http://www.peopleofwalmart.com/

And for all you folks wondering why we can't find much made in the USA anymore, you can thank unions pricing (and striking) their jobs right out of America. Unions were once necessary. Today they are outdated dinosaurs. It is no coincidence that companies like Kia, Hyundai, BMW, Mercedes, Honda, and Nissan are choosing Southern right-to-work states to build their non-organized labor plants in.





May 16, 2011 7:42PM
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Wal-mart likes us to think  they are good employers. If standing in the same spot for 10 hours is considered good then you have my sympathy!

I shop there as little as possible.  Why? We need people who are honest and sell American goods.  I haven't found anything in their stores -except food that - is American made.  By buying nonAmerican goods, we give not the person that made the product (barely enough to live on)  but the middle man and the stores a lot of money. The Americans who don't have a job, don't pay taxes, they don't pay into S.S. and  they need assistance. So we lose all around.  You can't always buy American, but you sure can try.  I'm buying fewer clothes - that's what washing machines are for - and/or I'm using the second hand stores.

May 16, 2011 3:12PM
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I don't know who is doing the shopping. I go regularly to both Walmart and Target and Target is ALWAYS more expensive. The only reason I go to Target is when they have something that Walmart doesn't carry. Walmart consistently has lower prices. If you are buying meat, don't go to either place. Stater Brothers always has lower prices on meat. 
May 16, 2011 5:36PM
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Also, I've worked in retail grocery for over 25 years. Walmarts groceries can be higher than a Kroger. Secret to saving in Kroger is to buy only sale items from the ad and don't stray. Then get staples at Walmart. Check the local Dollar Stores and Family Dollar stores too. I've noticed they're pricing on a few items can be better than both Kroger or Walmart. example would be the 22 count bag Lay's chips, my kids use them for school. Walmart and Kroger were both selling for almost $7 but Family Dollar had them for $6.49.

I wish there was a Target closer so I could compare prices. The closest Target is in Cool Springs darn near 50+ miles away.

May 16, 2011 5:28PM
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Another thing not taken in to account is Walmarts pricing plan for each store. They price per demographics or what the income and home income is. Most big retailers in groceries or hardline items do that today.     Yep, the same item in podunk  Hohenwald TN Walmart  can sometimes be had cheaper in Columbia TN. 34 miles away. I live in Hohenwald and work in Columbia and have to go to both frequently so I get to compare the pricing structure of both.

Oh and I love it when big retailers slug it out.Nothing like good competition to help the consumer.

May 16, 2011 5:22PM
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I don't even have a Walmart in my area so of course I go to target!
May 16, 2011 7:27PM
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I thought Wal-Mart's logo many years ago was MADE IN THE USA.
May 16, 2011 4:52PM
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great now all the idiots we've been avoiding at the wally world will now come to the targets and *uck them up too
May 16, 2011 6:12PM
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Has anyone else noticed the remodel in the wal-marts? you can't find a thing
May 17, 2011 8:11AM
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Why not shop at that mom & pop place close to your home,& save the gas,& bless them!
May 17, 2011 2:09AM
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I shop Wal-Mart, prices are cheaper, its my budget and when I can save the money I save by shopping Wal-Mart I will. don't care how messy the stores are, what type of people shop there, or where there products are from.  Besides who are you people fooling, look at the labels in any store in America including Target damn near everything is made in Japan or China.  They treat there employees the same as any other big box chain.  I know a lot of people that work at Wal-Mart and they seem pretty happy.  Besides people do have a choice don't like Wal-Mart, great don't shop there or work there you have options, that's what makes America, America.  And don't forget folks the stuff we make here in America is being shipped overseas for sale in other countries, funny how the world operates, we buy there stuff and they buy ours. 
May 16, 2011 4:54PM
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I go to target more it is true thant target is chiper than wal-mart a lot of the time!

May 16, 2011 6:06PM
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When I go shopping I always compare prices, what I have noticed is that every day pricing at Wal-Mart is always cheaper than the every day prices of Target, Kroger's, and Albertsons.  The only exception is the occasional ad for the others that have a few cheaper priced items for one week only and if you ask Wal-Mart to ad match the items they will, they have been doing this for years

May 17, 2011 11:24AM
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I have no doubt that most of the products in Wal-Mart and Target come from China or Japan. I also know that generally Target stores cost a little more to shop there. However, I still like Target much better than Wal-Mart. The stores are cleaner and  more organized. I have also found that the employees of Target are more helpful and they even seem happy to be there, unlike with Wal-Mart they look pissed as if I just interrupted something. And even though the products come from the same part of the world, Target's clothing seems to be of better quality. I bought clothes for many years at Wal-Mart and then started buying at Target when I realized I didn't like Wal-Mart. I still have the clothes that I bought at Target. I had to throw all the clothes I bought at Wal-Mart away and I couldn't donate them to Good Will because they actually had holes in them or the seams came undone. I have also lost lots of buttons from the Wal-Mart clothes. I am just happier with the over all product quality I see at Target. They are more expensive but I just enjoy shopping there a great deal more. Also, there are a number of Mom and Pop stores where I like to shop. I struggle to give them a lot of business because they are very expensive. I shop at Target because it fits my budget a lot better.
May 17, 2011 3:09PM
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I hate the remodel of the new Wal-Marts nowadays, can't find stuff like it was easy to do before, and I find the new design (brown) to be friggen ugly in contrast to the nostalgic blue it used to have, seems each year the Wal Mart down here gets worse and worse, first they take out the McDonald in there, then the Layaway, then the Kids center, and now the bakery with fresh donuts. It's maddening mon!
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