Christmas Presence

November 4, 2013

With one less week between Thanksgiving and Christmas Day, a dysfunctional federal government that is doing an excellent Grinch-that-stole-Christmas imitation and a consumer psyche that just won't quite feel better about things, this holiday shopping season promises to be a doozy.
Despite some rosy predictions from the forecasting suits who once again will maintain their perfect track records of always being wrong, the logical thinking is that business will be tough over the final seven weeks of the year.

We know online will continue to gain market share. We know more stores will open earlier and earlier during the Thanksgiving weekend period. We know Macy's, Kohl's and Penney will duke it out to see who can offer more coupons, door-busters, sale-on-top-of-sale-on-top-of-sale promotions and general marketing mayhem. And we know the third tier of MarMaxx, Ross and brethren will be jumping.

But there's one battle we don't yet know the outcome of, and in my mind, it's the most interesting head-to-head shaping up this holiday: Walmart versus Target.

For the past several years, these two discounting powerhouses have approached the holiday period with diametrically opposed strategies. Walmart has pounded away on price, while Target has been all about image.
Each occasionally edged into the other's domain, but for the most part each stayed on its own side of the marketing fence.
Not this year.

Target says it will go to a heavy price story in its holiday advertising and messaging, emphasizing specific price tags on specific products. It's been a long time - maybe as long as a decade - since the Minneapolis Mafia has gone this route.
In the meantime, their counterparts, the boys from Bentonville, are doubling down on their price-focused ad campaign. For the past several months - at least in the ads we see here in the New York area - they have been comparing specific products and shopping trips with other stores. One can reasonably assume they will continue to hit hard on this theme.

This is going to set up a classic battle this Christmas season: America's two biggest general merchandise retailers going mano-a-mano trying to win over the spending heart of shoppers everywhere.

Warm and fuzzy is out. Down and dirty is in.

So, who wins and who loses? Well, I guess the consumer wins because she will get to buy stuff cheaper. Whether it's stuff that will be made cheaper is another question, though that never seems to bother most shoppers.

I don't see Walmart losing on this. Every time somebody has tried to play Walmart's game they have lost. There's a discount store graveyard full of stores that lost that battle. Even Target, before it adapted its cheap chic strategy, couldn't compete on price with the all-powerful Big W.

You can't blame Target. Its strategy works brilliantly when times are OK and people feel like indulging a little bit. Its fatal flaw is when times are tough and every decimal point counts.
Who ends up on top of the Walmart versus Target battle may be what this holiday season will truly tell us: Exactly how bad the economy really still is.

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