Is Target Too Expensive? Profit Down 41%
Consumers are cutting back — and the AP says that shoppers are abandoning Target for even cheaper stores. In addition, Target's credit card division is running into trouble as shell-shocked shoppers aren't able to pay their bills.
The company also has seen rising delinquencies in its credit-card business, another source of trouble. The credit card business dragged down fourth-quarter results with a one-time, pre-tax loss of $135 million.
So, what do you think, is Target too expensive?
Target 4Q profit falls 41 percent amid downturn [AP](Thanks, j!)
(Photo:intangiblearts)
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Target decided a long time ago to enter the market as a high class big box store. Now that no one thinks they have money to spend on high class stuff, consumers are flocking to places they deem cheap like thrift stores and Wal-Mart.
I always find their toiletries expensive but DAMN if target doesn't have the best prices on stylish clothes. Yea i could root through thrift stores for a month to find suitable light winter jacket but Target had one new on sale for $30. COME ONE!
@Ameer Hashw: I think a lot of this perception of Target being much "more expensive" than Walmart is just the unconscious result of all the hammering on by Walmart about "low prices". I think their prices are pretty comparable, actually, though I'm sure each is cheaper for some things.
I'd go to Target over Walmart any day, I cant stand going to walmart. The small difference in price is not worth the extra 20 mins standing in line at the only open register in walmart. Plus i dont have someone stopping me at the door to take 5 mins to read my receipt to make sure i didnt steal anything. I HATE WALMART
I live just outside of Detroit (literally, just north of 8 mile of movie fame) and other then Walmart, there's nothing cheaper around here.
Plus, I don't feel like a mouth-breather like I do walking into a dollar store or Walmart.
Add in, around here, the closest Walmart isn't near any freeways AND is further north. During the day I'm at Target and at night I hit up Meijer's. CostCo works when I need things you buy in super size.
It's the extras at Target that people are cutting out (ie, fancy candleholders or other household decor items). From my comparison shopping, the "essentials" at target are within a couple percent of WM's price.
Target barely even did their "Global Bazaar" sham of a sale this year. They just immediately brought out 30% off home decor items that had "foreign" designs to them.
For items I buy regularly (i.e., household cleaning stuff, consumables) Target is roughly 2.5% to 5% more expensive than Wal Mart. This may not be the case for stuff you buy, but the wife and I have compared prices on our normal buy and Target does cost a bit more.
Having said that, we still prefer to shop there for several reasons: 1) it's physically closer to where we live, 2) the whole ingress/egress at most target stores is easier (Wal Mart stores have gotten TOO big, IMHO), and 3) the environment at Target feels better to us, less rushed, the store seems nicer on the inside, the layout makes more sense (to us) and . . . while this sounds awful, it is part of our decision process . . . Wal Mart tends to attract more of what we'd call "scary types" . . . yeah, I know, we're elitist pigs.
@Drowner: Like I said above, I think a lot of this is PERCEPTION rather than reality. Most people don't bother to actually compare their costs on things at different stores...they just make decisions based on their perception of how "upscale" the store is. Wal-mart has the "blue collar" image, so they assume it must always be cheaper than Target with the "upscale" image. Same goes for grocery stores, where people constantly talk about how expensive places like Whole Foods are in comparison to other grocery stores when in reality it depends on what specifically you're buying and whether it's exactly the same item at the different stores.
Marketing is reality for way too many people.
I actually would shop at Target over Wal-Mart any day, if there were any within a 20 mile radius. I hate Wal-Fart with a passion. Every Target I have been in were much cleaner, more organized, and less crowded. Not to mention they don't treat their employees like pond scum stuck to the dog shit on a janitor's shoe. I've also heard from a very reputable source (read: a shopper addicted to clothes shopping and holder of a Target credit card) that the clothes at Target are awesome.
Too bad. Kmart couldn't hack it against the Big Blue, and it seems Big Red may fail as well.
@johnva: I certainly agree that perception counts for a lot, in this case, I think Target also specializes in a lot of extraneous decorative stuff that people just do not buy when the money is tight. I'm sure their margins are the highest on these items compared to others.
We also prefer to shop at Target even though it is a bit more expensive. The layout is cleaner, the store is easier to navigate, and yes, the clothing is stylish and cheap. For some reason Walmart gives us the creeps, its dark and dingy and the lines are always soooooo long. Target is def. the way to go, especially since they have neat home decor.
I hate the bait and switch credit card game that Target plays. Works like this:
10% discount and a marginally reasonable interest rate when you sign up. Two,three billing cycles later ,sure as sunrise,there is the dreaded "change of terms and conditions" that jacks your APR into the 23 % range.I don't carry a balance ,so it really doesn't affect me,but it seems so sleazy that I just opt out when it's allowed and start the whole process over again several months later when there is a HUGE closeout on going out of season merchandise.
For folks that carry a balance,it's kind of like the relationship that the mouse has with the cheese in a trap...
@FlyersFan: Ever since we got a Target, I have drastically cut down on my Wal-Mart shopping. I can get a fair amount of groceries at Target, or go to the store down the street. Sometimes I still go to Wal-Mart, but a lot less often. I leave Wallyworld feeling like I've lost a bit of my humanity. But mileage may vary, but the ones here are so damn crowded all the time.
@Hodo: Consider me an elitist pig too. The overall feel of Wally World is that of a third world country with linoleum instead of a dirt floor. And their workers are physically unappealing. Target seems to hire mostly cute girls while Wally World hires then Appalachian great grandmother who holds a dim view of personal hygiene and dental care.
I stopped shopping at Wal-Mart years ago. I actually don't even know where my closest Wal-Mart is in my new city. Even so, I won't shop there (however they do seem to carry a lot of items that Target doesn't).
However, in lieu of shopping in Wal-Mart, I have switched my grocery shopping from Publix to Kroger (I love Publix the most of all grocery stores ever, but I walk out of Kroger for way less than I would Publix).
The problem with Target is that because their stuff doesn't suck, it can be hard to get out of there without spending $100 unless you're really disciplined!
I don't avoid Target when I'm feeling broke because it's expensive; I avoid it because I know I'll come home with two more sets of unnecessary but super-cute table linens because, frankly, I have a problem.
You stay classy, Target -- without you and Old Navy, I would be a nekkid pregger lady. I will cry if you change or leave, and that's no empty threat, since I'm full to my eponymous eyebrows with hormones.
The problem is, Target expanded wayy to fast...I mean, 10 years ago, I didn't even know what Target was, and now they have stores everywhere (obviously so does Wal-Mart). Target had been relying on its credit cards for a quick source of profits and now they are in a huge mess. As for their shopping being down, people aren't buying...anywhere! I have even been to Wal-Mart several times in the last month and they aren't as busy as they once were..and those that are there are simply buying the basics..no tacky home goods, electronics, etc. I don't prefer one store over the other however. When I'm back at home from college, I'll run into Target as Walmart is very far away.
@johnva: But According to the Consumers' Checkbook, Whole Foods IS more expensive (at least in the DC Area) almost 45% above the average and about 60% higher than the lowest priced store (which also has the highest rate of customer satisfaction).
[www.myfoxdc.com]
@Hodo: Me too, Hodo. Walmarts are nasty and I feel like I need a shower when I leave. I'm not interested in catching hepatitis to save a nickel. Target is cleaner, the employees are far more helpful, and there are always enough registers open.
For me personally, I don't shop much at Target anymore, but it has nothing to do with price. I've found I can get better prices on drugstore items at the new CVS we have (which is also closer to me). For clothes, I find Kohl's prices are just as good and the quality is about the same. For housewares, etc, I can either shop online or somewhere else. Consumerist's reporting on Target's policies for returns has prevented me from buying a lot of electronics, software, etc, when I used to buy a lot of that sort of thing from them.
@cabjf: That's almost certainly true, but then again, I have to wonder who buys all that useless crap in the first place? I've barely changed my buying habits because I never bought stuff I didn't need in the first place. The only things we buy at discount stores is stuff that is way cheaper than at the grocery or otherwise not available there. I don't get why people are spending so much there that a 2% price difference would make an enormous difference to their budgets. For me, saving 2% on what we spend at discount stores would be like saving a dollar a month or something.
@Eyebrows McGee: truth. over the summer, i went to target to get a mattress cover for my bed. $200 later... D: butbutbut the jeans are so cute and this little tin of tea was just adorable andandand...
I like Target because it's relatively inexpensive and usually a good shopping experience, but at the same time, I'm happy enough to hear about the credit card trouble. I'm kind of sick of getting asked every *single* time whether I want to sign up. I don't need another credit card. Almost nobody needs a new credit card right now. If they're pushing them on people who don't need them, it's their own fault if those people turn out not to be able to pay for them.
I don't shop at Target that often due to their return policies and the fact they don't price match during or post sale. Their change on price-matching policy has made me stop shopping there.
I find better deals on small items at Rite Aid with their SCR system. Combine that with manufacturer's coupons and Internet Coupons and allot of times I actually make a profit.
If you're very disciplined you can "stack forward" extra care bucks at CVS and continuously make a profit and get free stuff. "Stack Forward" means to use extra care bucks on items that generate extra care bucks. Combine with coupons (esp. Internet Coupons from coupons.com and smartsource.com). NEVER buy anything from RiteAid or CVS that isn't on sale or in the ad.
Walgreens doesn't let you stack forward. If you use a register reward on an item that generates a register reward, it won't print.
@johnva: I think you're right. That, and Target actually pays attention to design - in their marketing, clothing, goods. And that probably contributes to the "higher class, higher price" perception of their store. WalMart kind of just looks white trash.
The Target where I live IS more expensive than Walmart or Aldi, or going to the mall for clothes, especially since I keep running into many racks of 6$ jeans due to an insane surplus in my area.
Over the last year to 6 months to one year I have watched Target's prices creep up and up on regular priced items, and their clearances aren't nearly as good as they once were. Most of their clothes are so thin and cheap that they aren't even worth 3$ an item and they have nerve to charge 20$ for an ugly shirt. The generic target brand powdered drink mix went from 1.75 to 2.99 seemingly overnight, while the other stores in my area like Walmart and Aldi did not raise the price on this item.
It seems like it is cheaper to avoid the so called "cheap by perception" stores for clothing, as I have found many, many clothing items cheaper at department stores or malls due to clearances and sales. Plus you get better quality that way.
As long as your not shopping at Kohls, their clothes quality is beyond poor and their sonoma in-house brand jeans seem like they are paper thin. Their prices are also insane in my area for clothes.
The price also differs store to store. There are two Targets near my house, one I think has a sign that says Target greatland or something. That store has a wider selection of things and some stuffs like cleaning products and what not are significantly cheaper than the other Target.
But yea, Target ftw, no Wal-marts please, at least not the ones in my area.
Target here is waaaay far out compared to Wal-Mart and even some of the local grocery stores. I really don't go out to Target unless I'm planning to get something specific. Heck, I don't even go to Wal-Mart unless I'm planning to get something specific. The closer grocery stores have much better prices on everyday groceries and meats than Wal-Mart ever will.
Our local Target has decreased it's stock in about all of its departments and twice I entered without hearing any music being piped through the loud speakers. Muzak's doing or Targets? Don't know. But the place looked bleak. As to it's merchandise, I actually prefer to spend the $1 or $2 extra to get better made clothing that lasts longer. And Target offers a cleaner environment to shop in than Wal-Mart.
I agree about being disciplined. I used to shop at Target frequently when I only needed a couple of things, and come out with a giant cart full and a long receipt. Due to our current straitened circumstances (sigh), I try to avoid even going to Target -- not because I don't like it, but because I like it too much for our budget.

















I have found that it depends on the item. In my area, Target is cheaper when it comes to dishes (plastic...I'm in college), towels and other household items. When it comes to food, I go to the local grocery store (HEB). If I'm looking for cleaning products or toiletries, I go to Wal-Mart.