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Loyalty on the line as Walmart ads tempt Target shoppers

A whole lot of uncertainty now hangs over Target’s April same-store sales expectations, as Walmart this week began a major advertising offensive to regain customers and restore sales at its U.S. division.

Target forecast April comps would be in the mid-teens due largely to the late arrival of Easter on April 24, coupled with ongoing food and consumable gains related to expansion of the PFresh format to more stores and increasing penetration rates for the REDcard rewards program. Suddenly though, Target’s April expectations appear to be in jeopardy as Walmart is poised to inundate the marketplace with messaging around low prices, breadth of assortment and a hassle-free price match policy with the bulk of spending related to Easter yet to occur. The campaign, which began airing yesterday, follows several months where nary a peep was heard out of Bentonville as Walmart was focused on restoring product assortments, adjusting prices and tweaking store operations so its ads would ring true with the shopper experience.

Target had to know this day was coming and that Walmart wouldn’t keep shooting itself in the foot by pursuing a flawed merchandising strategy that alienated shoppers and resulted in seven consecutive quarters of negative same-store sales. The big unknown is how many of those shoppers disaffected by Walmart’s actions migrated to other retailers such as Target and are now susceptible to return to Walmart.

It would be reasonable to assume that some percentage of existing Target shoppers will find Wamart’s new campaign alluring enough that they will bypass Target on their next shopping trip. That’s just the reality of retail where fickle consumers are notorious for giving company’s second, third and fourth chances.

To follow this logic further, it is conceivable that a percentage of those customers who left Walmart only to be lured back by a slick television commercials in the months ahead will remember why they left in the first place. Even if that is the case, Target is still in for a challenging few months from a customer traffic standpoint Walmart re-enters some shoppers’ decision set.

 

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