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 8:30PM
Aug 27, 2012 7:43PM
BUY AMERICAN. It might cost more, but you won't be supporting China.
Aug 27, 2012 7:36PM
I want to see both of the stores sell more American made products. It is possible, the products are out there.
Aug 27, 2012 7:31PM
The Walmart near me is disgusting.  It's dirty and the price tags never match the products on the shelves.  If you love the mystery of not knowing how much anything costs, I guess it's great fun.  Overal, I find Target to be cheaper and more coupon friendly since you can stack Target and manufacturers coupons.  I also find Target's made in China crap to be more stylish/aestheticaly pleasing than Walmart's made in China crap.
Aug 27, 2012 7:19PM

Wal-mart SUX!

          - Raymond Babbit


Aug 27, 2012 6:53PM
I can actually believe that. Shopping at Walmart every week (because they closed down the Target close to my home) I can see how much their prices have gone up. And that's in Every Department !!
You would think with all their commercials they show its cheaper but "NO". Its a shame they have to lie to their loyal customers.

Aug 27, 2012 6:42PM
I used to shop at target all the time especially their clearance dept. I never used to shop at Wal-Mart until a year ago because they built a store one mile from my house, even though they built a target right down street from my house last year I don't go there anymore because its more expensive now, I shop at Wal-Mart for groceries, household items and other items I usually shop at clothing stores for clothes. Target is no longer cheaper.  
Aug 27, 2012 6:20PM
You have to be kidding me!  Has anyone gone into Target these days?  Their prices now are full retail and have gone up signicantly over the past year.  You get better deals at Kohls for clothes (Quality as well) and at CVS they typically email 25% off coupons on all purchases excluding the typical wine, ect.
Aug 27, 2012 5:34PM
I do not belive that Target is cheaper in my area. everytime I have been there, the prices are at least 20% higher than Walmart. I do agree that their stores are cleaner but prices are higher in my area.
Aug 27, 2012 5:26PM
I am no longer shopping at Wal-mart and am trading my Sams card for Costco.  I decided on this last month but this is the straw that broke the camel's back.  Wal-mart sucks.  I bought a money order earlier this month and decided I was not going to use it.  I took the money order back yesterday , it's receipt and the receipt where I purchased it from Wal-mart.  As of the week of 8/20/12, Wal-mart cannot give you a refund on a  money order, even if you purchased from their store.  The ghetto bitch in Money Service at Walmart even wrote on the back of it.  They gave me the number to Certigy and I was told by Certigy that I had no oustanding checks but the problem was the amount of the money order.  Nobody knows why they couldn't cash it, even the managers.  They didn't even try to find out.  This really sucks.  Moneygram is telling me to go back to Wal-mart.  I would rather deposit it or ca****omewhere else.
Aug 27, 2012 4:55PM
I WILL NOT BUY AT TARGET!!! They DO NOT HONOR THE AMERICAN SERVICEMEN & WOMEN!  I AM A VETERAN OF THE USAF. I have had sons in the Army (1), Navy (1), Air Force (2), Marine Corps (2) - and a grandson in the Air Force!!  AS FAR AS I AM CONCERNED - THEY CAN GO BACK TO FRANCE AND STAY THERE!!!
Aug 27, 2012 4:42PM
i love Target. Better quality and the stores are cleaner
Aug 27, 2012 4:23PM
I don't shop Target because their clothing lines are crap. Sizing sucks. It's likeall European based..or something...and I don't like the selection at all. Not all that please with Walmart either so don't think I'm bashing.  BUT..Target is in no way less expensive than Walmart. Not here in NW FL anyway.
Plus if they are all that....why are there store always so empty?
Aug 27, 2012 4:00PM
i don't know if i believe this are not. target being cheaper than wal-mart ? i know thats not true in my area. so i don't know why it would be true in others. there is something going on here that don't meet the eye. they using some kind of comparison thats not ringing true .wal-mart has double the space of grocery than target? and if your like me ? groceries are the second are third highest expense you have? if your car is paid off its the second,right behind your mortgage. and you will not have a cheaper total grocery bill than wal-mart . i can tell you first hand . i've shopped them all ( in my area) .this is how they line up . from cheapest to most expensive, #1 wal-mart-#2 kroger-#3 ingles-#4 publix-#5 target. now i' not counting alda stores ? you can get some products, there name brand cheaper than the stores listed but you limited to a small selection and variety.
Aug 27, 2012 3:15PM
WalMart and Target have lower prices than Amazon?  On some things they do but on QUALITY items Amazon wins hands down.
Aug 27, 2012 2:35PM
More date ads than legit comments. Reporting doesnt work. MSN doesnt care. Your message appears HYPERLINKED. All BS. MSN, you suck.
Aug 27, 2012 2:13PM
Strange how some rates on food at both stores are more than 25% higher than regular grocery store chains and the only really cheap items are the really bad clothing, toys, furniture. If you want to save money you have to shop all stores and all specials.
I went to Fred Meyer for a plain black belt but after price shock of 28.00, I went to Wal-Mart and got one for 12.00. It really pays to shop around, Dollar tree is good except for toilet paper it's rough and don't last, I buy mine at Bi-Mart 12-18 roll pack for 6.00 soft,bigger rolls and last for two months.
Aug 27, 2012 2:00PM
well, Target is cheap, Wal Mart is cheap, but in some instances, 99cents stores, Dollar Tree and so many others discount stores have a good variety of products and in some cases produce really good. Why are you going to pay for the same item 3 or 4 dollars, when you can have the same for a dollar? Money is scarce and sometimes it pays to do the math and you have to save every penny. I remember people they used to buy on upscale supermarket with excellent quality of course, and now they're buying in dollars stores and what they can't buy or find there, then they go to the real supermarkets. But don't forget to always do your research. We're in the 21st century and it sucks. I'm still remember the 80's and early 90's, everybody has a good taste. Now it's a matter of survival!
Aug 27, 2012 1:57PM

I can't say I honestly ever thought Walmart was particular cheap.  They had some good prices on some items, but more importantly, they had a good ad campaign that made people believe that if you shopped Walmart you'd save money. 


Like "Someone" below, I'd rather spend a little more and shop at Target than deal with the the hassle of Walmart. 

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