Posted by: nickgerlich | February 22, 2008

Good To Great

There’s nothing like the mention of the “R” word to send people scurrying away nervously. It is a word that no incumbent wishes to have associated with his or her term. It is a word that strikes fear among folks in the middle class and below. It is a word that often causes a knee-jerk response on Wall Street, making it at least theoretically possible that I may be doing this job until I am 85 and can afford to retire.

And it apparently is a word that sounds like the steady cha-ching of cash registers to retailing giant Wal-Mart.

Wal-MartYou see, when times are good, sales are good at Wal-Mart. But when times are less than good, sales are great. A report released yesterday shows that WM is scoring big sales gains (and corresponding jumps in its stock price), while its “cheap chic” competitor Target (oops, make that Tar-zhay) is struggling.

Score one for common sense here, folks. WM saw it coming, and adjusted its merchandising and pricing policies a few months ago; Target, on the other hand, thought it was time to go haute couture in women’s fashion.

Guess what? During a recession (real or imagined), people need the basics, not stylin’ dresses. Shoppers are now seeing Target for what it really is: an upscale-downscale store. And when the chips are down, they really do not want to pay more for everything.

Never mind that WM has well over 2000 supercenters across the US, while Target is still slowly trying to rollout its Super Target format (with a full-line grocery). The result is that most Targets have the equivalent of only a convenience store inside, with extremely limited selection.

I find it ironic that during this time of economic downtown, WM’s critics seem to have disappeared. Suddenly it’s OK to shop at Wally World, because now those savings mean something. But when we are all flush with money and job security, it becomes easier to bash the bastion of the poor.

When it comes to commodity items, I am all about saving money. Smugness has no cash value, and until Target figures this out, they will continue to stand across the street, watching customers pay homage to a man who really understood the psyche and pocketbook of America.

Dr “Now More Than Ever” Gerlich

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Responses

  1. It’s true that Wal-Mart will come out on top during a recession, but I think that has more to do with 30 years of branding our brains to think of them as the best price in town, not just a tactic they’ve rolled out in the last year.

    Target will be tempted to get cheap, too, which is the wrong move. People didn’t go to Target before because of cheap prices, but because of different stuff and a different vibe. What they need is more different stuff and possibly more stuff that costs more.

    The recession will come and go, but Target still has a very strong brand in the works, and they can’t let a two to three year recession stop that.

  2. I was just in Wally World today thinking, ‘Wow, they’ve really stepped it up and yet, the prices are still low.’ I came across a line of shabby chic comforters that were on sale for $30! A near identical quilt at Tar-zhay is $70-$80. I thought to myself that Wal-Mart has it right, provide similar styles and charge less.

    Target is a fabulous store, in my opinion, with unique items, as Brett mentioned, but is it just me or have they gone UP on their prices? I will give a nod to their dollar section at the front of the store. The goods are usually high in quality and are very unique items. I am however, a little peeved that the dollar items seem to be inching their way up to $2.50! That’s Target for ya.


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