Target reports its first drop in sales in six years, while Walmart sales perform better than expected. What are the two retailers doing differently?
Walmart’s deals are helping the company fill larger receipts than Target, boosting overall profits. Walmart reported a 6.4% YoY increase in Q2 store sales, while Target reported a 5.4% decline.
The two retailers often get compared and have had to overcome the same challenges emerging from the pandemic in the last few years—the two most prominent being excess inventory and inflation-hit shoppers.
However, the reality is that Walmart and Target are pretty different in approach, and it seems Walmart is better positioned to handle customers’ shopping needs.
Akrur Barua of Deloitte Insights notes that consumer spending on durable goods between Q2 2021 to Q1 2023 has declined by 0.4%.
Durable goods are often more expensive, and the decline in sales suggests shoppers are looking for deals over pricier products.
This is also Target’s first quarterly drop in sales in six years, according to Anne D’Innocenzio of Associated Press News.
D’Innocenzio suggests Target struggled in the second quarter due to “shoppers’ inflation worries” and the backlash to Target’s Pride merchandise which it later pulled, further frustrating shoppers.
Elsewhere, what’s particularly noticeable is Walmart’s lead in digital sales over Target.
In recent years, Walmart has worked hard to push into e-commerce, even competing with the likes of Amazon (it’s often said that the two are becoming increasingly similar).
According to the National Retail Federation, Walmart is the largest retailer in the world, accumulating $600.94 billion in worldwide retail sales in 2022, beating Amazon.com in second place at $343.33 billion.
Target can be found further down the line in 6th place with $107.59.
On a broader level, US retail sales grew 0.7% in July, beating Dow Jones’s 0.4% estimate. Walmart’s recent success suggests that the retail industry is doing extremely well—with the exception of Target.