Target steals title of 'cheapest' from Wal-Mart

This month, the retailer boasts even lower prices than its bigger rival.

By InvestorPlace Aug 24, 2012 11:01AM

By Alyssa Oursler

The famous Target (TGT) vs. Wal-Mart (WMT) battle rages on, and this month, a tally goes to the former. 

For the first time since October, Target has reclaimed the title of "cheapest" from its fellow big-box retailer, Bloomberg reported, and the gap was the biggest its been in the two years the difference has been tracked.

Post continues below.

That's especially important in today's economy, as cheap is exactly what consumers are looking for. High unemployment, coupled with rising gas and food prices, means customers are as cash-conscious as ever. And while retail sales finally improved in July, that was one of the first good signs for the sector in months.

Both companies have thus been trying to lure in those penny-pinching customers with discounts and slashed prices. The key to Target's success in the pricing department  came from the addition of a groceries to many stores, which cut into Wal-Mart's advantage on food prices. The company has also added discount incentives through its REDCard.

Cheap, though, can have its downside. Target's margins have declined for the past eight quarters, thanks in part to such deals.

And generally, Wal-Mart is still the name that tends to be associated with discount retailers like Costco (COST), as are dollar stores like Dollar Tree (DLTR) and Family Dollar (FDO). The larger company claims that its prices remain lower every day and that Target relies more on seasonal sales.

Target will have to prove that isn't the case when next month rolls around and the back-to-school promotion season has come and gone.

Both retailers are also trying to gain an edge in other ways -- by squeezing their large stores into cities, for example -- especially as competition from online giant Amazon (AMZN) remains tough.

While Wal-Mart and Target have lower prices than Amazon, one could argue that you can't put a price on the convenience the online retailer provides over a brick-and-mortar model.

For now, though, things seem to be going just fine for both companies. Wal-Mart has seen gains of nearly 37% in the past year, while Target's shares have climbed around 23%. Maybe with a price gap in its back pocket, Target will be able to climb some more and close that gap as well.

As of this writing, Alyssa Oursler did not own a position in any of the aforementioned securities.

More from InvestorPlace

Aug 27, 2012 8:41AM
Walmart has not been the "cheapest" in years in my opinion. It is funny how some have commented about the made in America products. Look around your house. So many of the products that you don't think about are not made or grown here regardless of which store it was bought.  I bet if some were to empty their house of all foreign products most would be sitting on a cardboard box made of trees from an unknown forest.
Aug 27, 2012 8:37AM
No way I wll step foot again in a Target ,I dfont care ifthey were next door,I'll dive 100 miles to a Walmart First.Customer Service is 0 at Target,Military NO SUPPORT of,nothing against Gays but hey turned down me to have a fundraiser for Our Woundd Warriors sine it might Offend soeone but that weeken the Gay Rights Activst handed out pampets at their door,That was WRONG,Sory you support Gays but not Armed Forces that are giving you the Right To have your doors OPEN.. Never willI buy anything associated with such a place,If you dont support OURMILITARY thenGet Out of America TARGET
True American Tim.  Where do you shop?  I would love to buy all American.  Best wishes
Aug 27, 2012 8:25AM

I do not shop at Wal-Mart because they undermine the American labor force and support the Chinese economy. This leads to more American dollars going overseas along with the foreign cars that are sold in America it doesn't matter where they are made, the profits still leave the country).

I do not shop at Target either as I think overall their prices are higher and the quality on most items are the same as Wal-Mart. The profits of Target also leave the country so we are selling out the country every time we shop there. Just to set the record straight, I am not a Democrat and I am not pro-union. I think if the American people would just spend a little more to get American made products, we all could share in the wealth. The mentality of many Americans is earn high wages thru union jobs but pay low prices by buying foreign goods. This doesn't work and the American piggy bank is going dry because of it.

Live in America, Work in America, Buy American. Let the rest of the world fend for themselves. Make this country great again. If we work for it we will again be the greatest country in the world. If we don't change and get back to work, we will be a third world country and China will tell us what to do.


Next time you purchase something foreign, think about which country's government will be in charge of your grandchildren's future, or you so shallow you don't even care about your own family?

Aug 27, 2012 8:23AM
I would rather pay a little more at Wal-Mart, than go to nice clean stores, like Target. At Wal-Mart, I get the added benefit of being able to watch the Wal-Martians.
Aug 27, 2012 8:11AM
I don't know which items the writer priced, but I read this article and went to Target, and the items I priced were all cheaper at Walmart.  Now go to Aldi's for your grocery shopping and you will find a Store that is cheaper then walmart.
Aug 27, 2012 7:54AM
target is the best retailer to shop at.  they are very well organized and clean aisles.  I rather pay a few more cents at Target than to save $$ at Walmart
Aug 27, 2012 5:02AM
I work at a Walmart because they work around my school hours.  I have to say that I prefer by far to shop at Target even without my 10% discount because it's always a better shopping experience for me.  The people who shop at Target seem to have a bit more class than those who shop at Walmart (hence the website, and I try to run away from work as soon as possible whenever my shift is over because of it.  In just this week alone, I was threatened by a customer who knew he had been seen trying to shoplift, did double the workload because Walmart tends to cut employees' hours after hiring, was belittled by a man who was completely sexist, and yelled at by another who demanded I explain something to him.  Unfortunately, this is the norm at my Walmart, and I'm finally fed up and ready to look for something else to make ends meet.  

A few days ago, another customer came in and told me that the environment used to be better when Walmart was still owned by the family, and my co-workers agree.  Now Walmart is owned by greedy people who donate practically nothing to charities.  I will always prefer shopping at Target, hands down.
Aug 27, 2012 4:17AM
Overall I'd rather go to Walmart,they consistently will match and beat anybody's price.They have more of a variety and I feel I save more in the long run there.!
Aug 27, 2012 1:57AM
Of course, it depends what you want.  If you want food, it's cheaper at Walmart or Target.  Cheap shoes are about the same but you can try them on ar W or T.  But if you want an electrical connector, it's $2.34 with free shipping at Amazon and $24.99 at W or T.  Likewise, the $275 camcorder I got from Amazon was $410 at Walmart.  And you can't beat Amazon for selection.  I wanted a bi- or tri-fold walllet with slots for lots of credit, ATM/debit, loyalty, etc. cards.  I couldn't find anything nice locally.  I found a nice leather one with 12 slots for $7.95 from Amazon.  And excellent quality padded bicycling shorts are less than $40 Amazon and that's what you pay for cheap quality ones at W or T.
Aug 26, 2012 3:10AM
It's just too bad all you sheep complaining about Wal- Mart's customer service don't realize this is an article about their low prices......SMH! It just kills me to see idiots complaining about something irrelevant to this article! And I even agree their Customer Service Usually Sucks!!! And they never have enough registers open. Even though all their super stores have 30 or more lines they NEVER have more then 10 or 15 open!! Yes It's just stupid, but this isn't the place to talk about that!!! Just saying!
Aug 26, 2012 2:57AM

I'm sorry but I've been in plenty(5 different at least) of Targets in 3 different states(OH, PA, and NV) and plenty(5 at least) of Wal-marts in the same 3 different states and There's just no way I can see Target as a better low price store then Walmart! Actually its not even close! Everything from q-tips to cd's, and from food to furniture is lower in Wal-Mart then in Target! I swear sometimes I truly think these so called experts wouldn't know their a** from a hole in the ground!!


Although I will say it seems like Wal-mart lately has been raising their prices little by little on a lot of items at a faster rate then most stores! Over the last couple of years actually! They don't have that big of price difference that they used to have that made them the number 1 discount store in the world!

Aug 26, 2012 2:10AM
They did not throw out the bell ringers.  They do not have any solicitation.  No exceptions.  They do support the salvation army thru their donations with United Way.  Their reasoning is the guests coming into the store do not want to be bothered by solicitations.  Those who want donations can fill out a form for their group and ask for it, and then it gets approved or disapproved.  Salvation Army gets their donations from United Way thru Target.
Aug 25, 2012 10:38PM
walmart does not hire full time employees anymore at all!  Keeps them from having to pay many benefits. I've been there over 11 years and it's not horrible but they could pay better. I have always trid to help customers and I work overnights and the customers and associates are much nicer and helpful on overnights! That's why Ive always worked overnights.
Aug 25, 2012 9:56PM
 Wow the nutbags are out in force here,.there are2 kinds  people, there are those whoMshop at WalMart  and those who lie about shopping at WalMart. My neighbor who spouts venom constantly about WalMart and  WalMart shoppers. I happeed to be in his garage helping him with his lawnmower when his wife pulled in with 9 bags of goodies. From where you ask? ,,, WalMart of course. I hope he spouts more of his venom soon
Aug 25, 2012 9:32PM
So now that the truth is out, Target prices will go up and we all get screwed. Nice!!
Aug 25, 2012 9:14PM
Where I live we don't have any other store choices except for WM for a lot of the items I use! I despise going there, and try to avoid it whenever possible. In my area I have a choice of 4 WM super stores that all carry something different! Two are in the same town, just opposite sides, 1 in my town, and another in a nearby town. Their service is horrendous. Never have enough cashiers nor competent employees in specific areas. My teenage sons know more about hunting than anyone in the sporting goods dept! I shop at Save-A-Lot for my groceries unless I need something they don't carry. For odds and ends I usually go to Dollar General. Walgreens is my pharmacy of choice. WM NEVER has what I need, when I need it nor do they keep their items in stock--not to mention in the same place twice in the very same week! I don't understand how they stay in business. I sincerely am ashamed at what has happened to a decent store when Sam Walton died.
Aug 25, 2012 9:03PM
Not big on Walmart but when Target threw out the Salvation Army Christmas bell ringers a few years ago I stopped going there.  Why would you throw out the Salvation Army?  Why?
Aug 25, 2012 8:42PM
I definitely prefer Target over Wal-mart.  Customer service is usually better and the stores are more organized and clean.  I also like to use my red card and get 5% back.
Aug 25, 2012 8:12PM
I can't see where this information comes from. On 90% of similar items (not freh vegetables and fruits etc) Walmart is so much cheaper ythan Target.
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