Off The Mark
August 22, 2005-- Home Textiles Today,
Boy, did I get it wrong.
A few years ago, when Kmart sank into bankruptcy and whacked back its store base, I opined that the real loser would be Target. My reasoning: Target had always been shielded from direct comparisons to Wal-Mart because Kmart stood between the two. And Kmart's financials, compared to either, were seldom pretty.
Mea culpa. Today, as we all know, it's Wal-Mart's performance that looks less-than-stellar when compared to Target's. Moreover, Target's performance has been the cudgel that Wall Street uses to whap Wal-Mart.
Target's merchandising influence has become infectious. There are few big box retailers that aren't now attempting to inject more contemporary design into their assortments, move newness in and out of the mix more frequently, and dial up the stylishness of their marketing efforts.
Including Wal-Mart. Three key initiatives here: the drive to add better merchandise at the top end of its assortment (such as 400-count sheets); the recent introduction of hipper, MTV-style ads for the back-to-school season (albeit still featuring “real people”); and the establishment of a Manhattan design office staffed by product developers recruited from West Elm, Abercrombie & Fitch and the like.
Perhaps nothing brought home the Wal-Mart versus Target gap like veteran hedge fund manager James Cramer's post last week on TheStreet.com, which was headlined: “Wal-Mart, Fess Up to the Weakness Within.”
Responding to Wal-Mart's lackluster second quarter performance last week and conservative third quarter outlook, the motor-mouthed host of CNBC's “Mad Money” had this to say: “It has to stop assuming that things will have to get better just because they always have, because, frankly, for the last five years, they haven't … Wal-Mart simply isn't a fun place to go, and that lowest price isn't the only drive anymore.”
Although millions upon millions consumers famously pass through Wal-Mart's stores each week, NPD Group data shows that when its core customers go shopping for apparel and home, they visit JCPenney, Kohl's and Target — in that order.
Wal-Mart is well aware of the migration of its shoppers elsewhere for softlines purchases. (More quietly, it is also said to be concerned about the gravitation of its bottom-third customer segment to dollar stores.) It's a smart company with a lot of money. It just has to decide where to set the bar.
Wal-Mart can no more accelerate its softlines comps by becoming Target than Target could have survived the '90s by aping Wal-Mart. Ironically, the mass merchant who could benefit most from Wal-Mart's current confusion is Kmart (in the guise of Sears Essentials) — which was the first to raise the bar in home at the discount level with Martha Stewart Everyday.
Then again, I could be wrong.
Related Content By Author
Industry Related Content
New homes for Indo Count, Trident