Wal-Mart, Target share many traits despite rivalry
Target and Walmart stores market vastly different versions of American exceptionalism, yet the companies have much in common.
The Washington Post
WASHINGTON — Along interstate highways and in suburban town centers, sometimes separated by nothing more than parking lots, stand the warring titans of modern retail, selling flat-screen televisions next to fortified milk.
Here, they battle for the heart and wallet of the American shopper. And your allegiance is as telling as your taste in cable news or the contents of your Netflix queue: Are you cloaked in Target's bull's-eye red or Walmart's royal blue?
"I don't like Walmart," said Nadirah Moreland, 39, in the shoe aisle of a Target store in the Columbia Heights neighborhood of Washington, D.C. She says Target is "kinder, gentler. They don't aggressively usurp mom-and-pop stores like Walmart does."
"I've been to a Target once," said Vanessa Cruz, 29, while perusing children's clothes at a Walmart in Fairfax, Va. "Target has beautiful stuff, but I don't go there. The prices are different. Walmart is cheaper, and they have everything."
Each has its loyalists — and no wonder. The stores market vastly different versions of U.S. exceptionalism: Walmart champions efficiency, thrift. Target offers style, aspiration. Walmart gives us low prices on everything we need; Target tells us what we want.
Yet the companies have much in common. "The remarkable thing," said Charles Fishman, author of "The Wal-Mart Effect," "is that 80 percent of the stuff in Target and Walmart is identical."
The prices are often identical, too. The most recent comparison by Bloomberg Businessweek found only a 46-cent difference between the two retailers per $100 of purchases. (You'll save that 46 cents at Target, although Walmart usually wins independent price comparisons.)
Target and Walmart are, in short, the fraternal twins of American retail, sharing much of the same DNA, yet strikingly different.
Four stores and 50 years ago, in a coincidence that looks prophetic only in hindsight, Pax Americana gave birth to discount shopping, with Target, Walmart, Kmart and Kohl's all sprouting up in America's heartland. The economy was booming and the concept, ingenious: Replace seasonal sales by selling discounted goods year-round.
The retail revolution came with a growing middle class lapping up toasters and Tide for cheap, cheap, cheap. Discounters catered to the haves and have-mores, anticipating — and cultivating — the have-it-now culture that characterizes modern consumerism.
For Walmart and Target, success was born of the Southern and Midwestern values championed by their respective founders. Sam Walton couldn't have known his discounter would one day become the world's largest private employer. And the Dayton brothers wouldn't have guessed that Target would democratize design for an entire country.
Instead, they possessed an intuitive sense of what drives every customer, characterized by Natalie Gutierrez, 30, as she browsed ottomans in the Columbia Heights Target a few Sundays ago.
"I already have everything I need," Gutierrez said. "But I always like to come in and see if there's something I may want."
Hatching the idea
In 1962, the Dayton Co. — which ran the successful Dayton's department stores — opened its first Target in Roseville, Minn. The five grandsons of company founder George Dayton hatched the idea for an upscale discount chain based on their existing low-priced Downstairs Store.
"What made them so successful is that they've been very clever at executing on their core mandate: They are the upscale discounter," said Laura Rowley, author of "On Target: How the World's Hottest Retailer Hit a Bull's-Eye."
Even at inception, customers responded to Target's friendly and modern atmosphere. "Doug Dayton first heard it called 'tar-JAY' in 1962," Rowley said. The tongue-in-cheek French pronunciation would further the store's cheap-chic ethos.
A few months later, Sam Walton left behind his Ben Franklin five-and-dime franchises to start Walmart Discount City in Rogers, Ark. In the beginning, Walton was relatively cautious while scouting future sites, hopping into a glorified crop duster to survey towns in the rural South. Walmart — which incorporated as Wal-Mart Stores in 1969 — wouldn't grow with its trademark ferocity until the 1970s and '80s.
"He was paying attention to places where nobody else was," said Alan Dranow, senior director for heritage and marketing at Walmart. "Everyone thought you had to go to urban areas or towns of 50,000. Sam said, 'I disagree.' He wanted to serve the underserved. So Walmart grew in rural areas before everyone knew what was happening."
What was it about 1962? Was it the housewives? The novelty of suburban shopping? This seemingly idyllic age would end soon after the consumer carnival began, with the first of the 1960s assassinations and the Vietnam War looming. Still, the four horsemen of discount grew fast and fastidiously, led by Kmart, which had 162 stores by 1966. Target founded its in-house advertising team in 1968, a celebrated department that's still operating. By 1970, Wal-Mart Stores was a publicly traded company, splitting its stock for the first time the next year.
What's remarkable about Walmart and Target is not so much their 80 percent overlap as their 20 percent differentiation. They may offer the same discounts, but they have a very different sales pitch. Target — with its danceable ads, creative collaborations and in-store Starbucks — makes no apologies for actively seeking the upscale shopper, differentiating itself with design.
"When you look at Kmart or Walmart, they had licensing agreements with Mary-Kate and Ashley Olsen or Jaclyn Smith," Rowley said. "Jaclyn Smith is an actress, not a designer. Target chose Michael Graves, one of the most respected architects in the country, to design his own line of products. From there, they went forward to Isaac Mizrahi. They were the very first to do that."
Barbara Kahn, professor of marketing at the University of Pennsylvania's Wharton School of Business, said: "From a societal perspective, it used to be that design was the focus of the affluent. But having design at Target suggests that design can be had by people who desire it at any price point."
Except those who really can't afford it. At a recent news conference in New York, executives said they're investing in mobile technologies for their smartphone-wielding customers. They're shunning holiday layaway. "Our guests have not asked us for it," Target Chief Executive Gregg Steinhafel said.
That's why there's a Walmart down the street.
Convenience a plus
Walmart didn't create the suburbs, but it did help build them. Convenience kept customers loyal because, well, Walmart was there first. (It's also ubiquitous: Walmart has 3,942 stores in the United States, whereas Target has 1,770. There are 140 million Americans who shop at Walmart every week, more people than voted in the last presidential election.)
The Walmart in Fairfax is a gleaming heap of pale concrete stuffed with groceries, housewares and Hello Kitty paraphernalia, a mecca of one-stop shopping.
With walls swathed in cheery Walmart blue and signs welcoming you to "Save Even More," you can find 160,000 stock-keeping units, or SKUs, of stuff, the average product count at any given Super Walmart.
"Pile them high and watch them fly. That was Sam's motto," Dranow said.
Walton was clearly onto something. "Walmart is operational excellence," Khan said. "They're the ones who came in with the notion of everyday low price."
Fishman has a different take: "Walmart was a huge force in teaching Americans that what mattered was price, regardless of quality. Walmart didn't create the disposable society in America, but they reinforced the idea that quality is irrelevant so long as you're getting a great price."
Meanwhile, the Walmart/Target wars wage on, dividing while singing a similar jingle: Expect More. Live Better. Pay less. Save Money. Always low prices for everyone on everything.
Except the folks who need layaway. They'll just have to go to Walmart.