When it comes to one-stop discount shopping, two retailers reign supreme: Walmart and Target. These giants have come to dominate the industry with a winning formula of low prices, huge selection, and widespread convenience. For millions of households, Walmart and Target are the default options for everything from milk to underwear to motor oil.
As a retail industry analyst and consumer behavior expert, I‘ve studied these companies for decades. Let‘s take a deep dive into what makes them tick, how they stack up against each other and their rivals, and where they‘re headed in the fast-changing world of retail.
The State of Discount Retail
First, let‘s set the stage with some key statistics. As of 2023:
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Walmart is the world‘s largest company by revenue with $611 billion in annual sales. It operates 10,500 stores across 24 countries and employs 2.3 million associates.[^1]
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Target is ranked #78 on the Global Fortune 500 with $106 billion in revenue. It has 1,931 stores and 350,000 employees, all located in the United States.[^2]
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Walmart and Target‘s next largest rival is Costco, the members-only wholesale club, which has 838 warehouses and $226 billion in annual sales.[^3]
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Amazon is rapidly gaining ground in general merchandise retail with $470 billion of net sales in 2021. As a digital native, it has far fewer physical locations but a vast logistics network.[^4]
| Retailer | Revenue (2021) | Stores | Employees |
|---|---|---|---|
| Walmart | $611B | 10,500 | 2.3M |
| Target | $106B | 1,931 | 350K |
| Costco | $226B | 838 | 304K |
| Amazon | $470B | 600 | 1.6M |
As you can see, Walmart entirely dwarfs the competition in terms of sheer size. Its revenue is more than 5X that of Target and Costco combined, and it employs more people than the population of Houston, Texas.
However, size isn‘t everything in retail. Let‘s examine how Walmart and Target actually compare as shopping destinations.
Price
On price, Walmart has a clear edge. With its massive scale and no-frills stores, Walmart is relentless about minimizing operating costs so it can offer "Everyday Low Prices." In fact, price leadership is the core of Walmart‘s brand promise.
Target aims to be a trendier, slightly more upscale discounter. So while it certainly offers competitive prices, you‘ll usually pay a bit of a premium over Walmart for a given item – think 5-10% more on average. In exchange, Target stores have a cleaner, more inviting ambiance and a more curated assortment.
Both retailers use a high-low pricing strategy, with frequent promotions and markdowns to drive traffic and urgency. And both employ sophisticated price optimization algorithms to dynamically adjust prices based on factors like inventory, demand, competition, and margin targets.
Selection
In terms of sheer number of SKUs, Walmart supercenters can‘t be beat. These cavernous stores carry over 100,000 products across dozens of categories from produce to patio furniture. Walmart‘s buying power allows it to be a "category killer" in areas like toys, which it can sell cheaper than rivals.
Target locations are typically smaller and more edited than Walmart. An average store carries around 80,000 items.[^5] Target doesn‘t try to sell everything to everyone, but rather focuses on profitable, high-velocity categories that appeal to its core customer base of young families.
Both companies have significantly expanded their online assortments. Walmart.com sells 60+ million products while Target.com has 22+ million available.[^6] Much of this expanded selection comes from third-party marketplace sellers, similar to Amazon.
Store Experience
Here‘s where Target really shines. With its bright lighting, wide aisles, trendy displays and pop music soundtrack, Target feels more like a department store than a discount store. Target invests heavily in visual merchandising, store design and signage to create a welcoming vibe.
In contrast, Walmart stores are more cluttered and industrial. The singular focus on low prices doesn‘t leave room for frills or flair. A Walmart store is a quintessential "big box" environment, built for efficiency rather than aesthetics.
Of course, these are generalizations. Both chains have a variety of store sizes and formats, and not every location fits the stereotype. Walmart‘s newer Neighborhood Markets have a much different look and feel than its traditional Supercenters.
| Criterion | Walmart | Target |
|---|---|---|
| Price | 5 | 4 |
| Selection | 5 | 4 |
| Store experience | 2 | 4 |
| Online/app | 4 | 4 |
| Fulfillment options | 4 | 4 |
| Loyalty program | 4 | 5 |
Online and Omnichannel
Given Amazon‘s meteoric growth, Walmart and Target have had to aggressively invest in e-commerce to stay relevant with digitally-inclined shoppers. Both now offer user-friendly websites and mobile apps with a full array of omnichannel fulfillment options.
Walmart has poured billions into its online capabilities. It acquired Jet.com for $3.3 billion in 2016, then followed up with a slew of smaller digital-first retailers like Bonobos, Modcloth and Art.com. Walmart has also built a massive online marketplace rivaling Amazon‘s (but with more stringent seller requirements).
Target was a bit slower to embrace e-commerce but is rapidly making up ground. Its 2017 acquisition of Shipt jumpstarted Target‘s same-day delivery options. Target has also been ahead of the curve with features like augmented reality furniture previews in its app.
While they have different strategic emphases, Walmart and Target share a focus on leveraging their store footprints for omnichannel convenience. Both offer in-store pickup, curbside pickup, same-day delivery and free 2-day shipping on a huge assortment. Walmart recently launched Walmart+, a Prime-like subscription with exclusive perks.
Groceries and Private Label
Groceries are a key battleground for Walmart and Target. With consumables driving repeat visits, both retailers have invested heavily in their food and beverage assortments.
Walmart is the nation‘s largest grocer with a 26% market share.[^7] Groceries account for more than half of its US sales. While not known for healthy options, Walmart has gradually expanded its produce section and rolled out more organic choices.
Target has taken a more upscale approach to food in line with its "cheap chic" branding. It has remodeled hundreds of stores with an expanded "PFresh" grocery layout featuring more premium and healthy products. Target‘s grocery aisles have a more curated feel with selections tailored to on-the-go families.
Private label brands are a major strategic focus for both discount giants. By sourcing products directly from manufacturers, retailers can cut out markups and offer quality goods for less. They can also use private labels to differentiate themselves and build shopper loyalty.
Walmart has a sprawling array of house brands like Great Value, Equate and Mainstays that span virtually every category. Its private labels are primarily positioned as opening price point options vs national brands.
Target has a more elevated private label approach. Its house brands like Good & Gather, Up & Up and Room Essentials are designed to be stylish and premium – often called "national brand comparables" or NBCs. Many shoppers swear Target‘s own labels are better than competing mainstream brands.
Social Impact and Sustainability
As two of America‘s largest companies, Walmart and Target inevitably have major impacts on social and environmental issues. Both face pressure from activists, employees and consumers to be responsible corporate citizens.
Walmart has faced heavy criticism over the years for its labor practices, including low wages, irregular schedules and anti-union stance. In response, it has raised starting pay to $12/hour and expanded benefits like parental leave and college tuition. It also touts sustainability efforts like renewable energy and zero waste.
Meanwhile, Target has cultivated a more progressive reputation. It was one of the first retailers to raise its base wage to $15/hour and offers generous benefits like paid family leave. Target has also been a leader on LGBTQ+ inclusion and racial diversity in its marketing and product lines. On sustainability, Target has pledged net zero emissions by 2040.
Of course, both companies still face plenty of ethical scrutiny – from allegations of forced labor in supply chains to charges of "greenwashing" cosmetic changes. As they keep growing, the societal responsibilities of mega-retailers like Walmart and Target will only magnify.
Looking Ahead
So what does the future hold for Walmart, Target and the discount retail sector as a whole? Here are a few key trends and predictions:
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E-commerce will keep booming. Online sales growth shows no signs of slowing down. Retailers will have to keep innovating digitally while also leveraging their physical locations for fulfillment and customer service. Smaller rivals may get left behind if they can‘t afford the omnichannel investments.
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Tech will transform store operations. From shelf-scanning robots to AI-powered inventory systems, emerging technologies will help retailers cut costs and improve performance. Cashierless checkout, personalized offers, smart carts and augmented reality will reshape the shopping experience.
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Experiences will be a differentiator. As online shopping becomes ubiquitous, stores will have to offer more than just products to draw traffic. Watch for retailers to add interactive demos, BOPIS lockers, community events and other immersive elements to make locations worth visiting.
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Private label pushes will accelerate. With inflationary pressures and supply chain snarls, retailers are more motivated than ever to expand their higher-margin house brands. Expect more flagship labels and niche products aimed at different customer segments.
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Industry consolidation will continue. In this highly competitive, capital-intensive sector, weaker players will likely keep struggling. The biggest companies like Walmart and Target have major scale advantages. More acquisitions and mergers could lie ahead.
Of course, the only constant in retail is change. New upstarts and business models are always emerging to shake up the status quo. But given their current market clout and strategic savvy, it‘s a safe bet that Walmart and Target will keep defining the future of discount shopping.
The Bottom Line
Here‘s my expert take: If you want absolutely the lowest possible prices and the widest imaginable product variety, Walmart is your best bet. If you prefer a more edited, curated assortment with a bit more style and polish, Target is the way to go. Both provide incredibly convenient, cost effective one-stop shopping across all the bases American households need.
Rivals like Costco, Amazon and Dollar General all have distinct strengths as well. And of course, you can always cherry-pick the best deals from multiple outlets, or mix in specialty stores for certain items. But at the end of the day, you really can‘t go wrong with either of the two titans that utterly dominate the retail discount game: Walmart and Target.
References
[^1]: Walmart 2022 Annual Report[^2]: Target 2022 Annual Report
[^3]: Costco 2022 Annual Report
[^4]: Amazon 2022 Annual Report
[^5]: Target Fast Facts
[^6]: Marketplace Pulse Research 2021
[^7]: Barrons 2022
