Target Shoppers Aren’t ‘Cautious,’ They’re Shopping At Walmart

Image courtesy of Northwest dad

This week, both Target and Walmart released their quarterly financial results. Based on the results and executives’ comments on those reults, it’s almost like they’re from two different quarters or years entirely, or at least not from two discount stores that are generally close competitors. Maybe it’s not that shoppers are clutching their wallets or spending on home renovations instead of everyday home goods, a Target speculated. Maybe Target’s shoppers are just heading to Walmart more often.

The keen business minds over at Bloomberg noticed this trend and compared the stores’ narratives and performance. While Target’s stores are generally full of more affluent shoppers, the chains are still similar enough that it makes sense to compare them.

When sharing its results, Target CEO Brian Cornell blamed lower sales on consumers in general being “cautious” and spending their money on home renovations and things that are definitely not groceries at Target. Walmart’s growth in sales and total transactions shows that consumers are doing just fine — or perhaps they’re seeking cheaper prices and a wider variety of groceries at the strip mall across the street rather than going to Target.

Walmart also notes that low gas prices are helping, since it leaves more money in shoppers’ wallets. (The company does sell some gasoline at its Sam’s Club warehouse stores, but discounted gas for members is more of an inducement to shop at the store and not something that the chain is looking to make money from.)

Walmart doesn’t just have 100% more monkeys rampaging in its parking lots. In the company’s quarterly earnings call, executives shared that sales are up, customer satisfaction scores are up, and shoppers are shopping.

“The latest retail sales data show that consumers are somewhat cautious at the turn to the second half of the year, but they are not pulling back sharply,” an economist at Bloomberg Intelligence observed.

Maybe the leaders of both companies are right: for American consumer as a whole, being “somewhat cautious” means shopping at Walmart instead of Target, rather than cutting back on their spending entirely?

Wal-Mart Outlook Rebuts Target’s View of Jittery U.S. Shopper [Bloomberg]