With Amazon killing the malls, what's the thinking on Wal-Mart and Target?

Wal-Mart has made headway into online sales and I see no reason target can't do the same with perhaps higher dollar and quality goods.

IMO target should drop the food section, it's crap compared to Wal-Mart or Kroger..etc

Target currently has a low PE, near 11 and I'm tempted, assuming they get online working and keep going after trendy/higher quality items un clothing, electronics...etc

What's the retail play?

MELI in Brazil

Yes their food division is weak, but that's a huge driver to get people still in brick and mortar stores- that's why Walmart same store sales haven't shrunk imo.

Amazon is so far ahead of Walmart/Target on online shopping- that's a really expensive hill to climb to build out.a competitive site (agree they have to though).

Wal-Mart bought some company, jet.com or something that's helped them with online sales

I also read that Wal-Mart is looking at 1 hr delivery for online purchases. Apparently they already do 2 hr delivery in China

They don't have to take on Amazon entirely, just get some piece of the action. Same for target

jamey said:

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Wal-Mart bought some company, jet.com or something that's helped them with online sales

I also read that Wal-Mart is looking at 1 hr delivery for online purchases. Apparently they already do 2 hr delivery in China

They don't have to take on Amazon entirely, just get some piece of the action. Same for target

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Amazon is rapidly building their own delivery service . As this develops it will force UPS - FedEx etc to scramble to find uses for their massive infrastructure. I can see a real opportunity for them and the big box retailers in large markets to go head to head with 1-2 hour delivery.
The next decade will change the face of retail like nothing has in a hundred years.

There are other players in retail who will help change the game.

mazag08 said:

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There are other players in retail who will help change the game.

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Like who?

jamey said:

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IMO target should drop the food section, it's crap compared to Wal-Mart or Kroger..etc

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No way this will happen. I buy most of my groceries at Target and many people I know do the same. I avoid Wal Mart like the plague and Target is consistently cheaper than the grocery only chains. Add in their Cartwheel app and their Redcard, they are hard to beat and they aren't going anywhere.

We were talking about Target vs Wal-Mart at work yesterday

Apparently a lot of us choose Target when we need a thing or two just to avoid Wal-Mart

But if I need food and other stuff I'll suffer Wal-Mart because the food section is so much better

jtraggie99 said:

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jamey said:

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IMO target should drop the food section, it's crap compared to Wal-Mart or Kroger..etc

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No way this will happen. I buy most of my groceries at Target and many people I know do the same. I avoid Wal Mart like the plague and Target is consistently cheaper than the grocery only chains. Add in their Cartwheel app and their Redcard, they are hard to beat and they aren't going anywhere.

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Target CEO Brian Cornell is seriously considering it. I don't think they'll drop the food section, but I do think they'll eventually downsize it considerably

Jimmie Dimmick said:

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jtraggie99 said:

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jamey said:

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IMO target should drop the food section, it's crap compared to Wal-Mart or Kroger..etc

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No way this will happen. I buy most of my groceries at Target and many people I know do the same. I avoid Wal Mart like the plague and Target is consistently cheaper than the grocery only chains. Add in their Cartwheel app and their Redcard, they are hard to beat and they aren't going anywhere.

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Target CEO Brian Cornell is seriously considering it. I don't think they'll drop the food section, but I do think they'll eventually downsize it considerably

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That would be interesting considering all of the Targets around me are going through major renovations and remodels. And none of that involves downsizing their food section. In fact, if anything, they seem to be enhancing it. After spending that time and money, it would be very surprising to see them change course.

I guess I'm in the minority, but I do not understand the dislike for their food, I tend to prefer it.

The food section at the Target in my area is limited, not very nice, missing basics..etc


In a nutshell it looks like Target has what should be Wal-Mart's low quality food section and Wal-Mart has what should be targets high quality food section

So for higher quality/selection clothes, electronics..etc it's Target

For higher quality/selection food it's Wal-Mart

At least that describes the two in my area and they're about a half mile appart

Brick and mortar retail screwed up by not realizing that the logistics portion of retail would just get easier over the past decade and that will continue to happen with non-food goods. The only way Target survives the next decade or so is to beef up grocery and continue to expand pharmacy.

ATM9000 said:

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Brick and mortar retail screwed up by not realizing that the logistics portion of retail would just get easier over the past decade and that will continue to happen with non-food goods. The only way Target survives the next decade or so is to beef up grocery and continue to expand pharmacy.

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Main reason I avoid retail and hate going to grocery stores is because I spend 1/2 hour walking around looking for crap.

kayakag said:

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ATM9000 said:

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Brick and mortar retail screwed up by not realizing that the logistics portion of retail would just get easier over the past decade and that will continue to happen with non-food goods. The only way Target survives the next decade or so is to beef up grocery and continue to expand pharmacy.

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Main reason I avoid retail and hate going to grocery stores is because I spend 1/2 hour walking around looking for crap.

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That's why I only go when it's time to load up. Otherwise I'll go to the smallest store I think has it, with target being the first big store option for something not at gas station, CVS...etc...since target isn't near the mess to deal with that kroger or Wal-Mart is

I think Target should drop all the perishable items.

I don't see how they're not taking a huge loss on that stuff.

Drinks, candy, alcohol, snacks, etc... I think they probably do better on.

Vernada said:

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I think Target should drop all the perishable items.

I don't see how they're not taking a huge loss on that stuff.

Drinks, candy, alcohol, snacks, etc... I think they probably do better on.

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Cuz they stock at such a low level they rarely have spoilage. Of course, they also rarely have what I'm looking for so I get frustrated and go somewhere else.

Target needs to either upgrade their grocery section or disband it

I can see the argument where you get people in with grocery. I pick Target first for non grocery oddball item because the parking lot is empty compared to Wal-Mart. In and out, boom

I dread going inside Wal-Mart

Cornell has gone on record many times that they are not a full service grocer and do not want to be. He sees food as a fringe part of their business designed to get a few more items in your basket. Some of the renovations relate to shifting their food offering to be a little more organic and niche, not expanding it. If this doesn't produce the results they want, expect them to pull back on food overall.

I guess the Target by me is in the minority. I would say it's almost on par with Wal Mart (which just so happens to be across the street). I cook a lot, make weekly grocery trips, and can probably get 90% of what I need there. The main thing I almost always get somewhere else is fresh meet or maybe some specialty items from time to time (the kind of things you can't usually find at most grocery stores but maybe Whole Foods or Central Market).
I am aware that not all Targets are this way, as I have been in some that have the much smaller grocery sections. But I would say most Targets in my area (North Dallas, Plano, Frisco) have large grocery areas. And they always seem to be busy. The stores are just nicer than Wal Marts usually and you don't get the huge lines. Target seems to do everything they can to not let the lines back up and open new registers, which I greatly appreciate.

Anyway, as far as I am concerned, I'm hopeful they don't cut back or do away with them, at least where I go.

I think you're talking about Super Target's and the others are talking about the food section at a regular sized/traditional Target.



There's a HUGE difference in what they carry in their grocery departments.

That would explain a lot. I just assumed they were all moving to Super Targets, or mostly had. I rarely see the non-super Targets anymore...

Quote:

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Target: Between a Rock (Amazon) and a Hard Place (Wal-Mart)

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http://www.barrons.com/articles/target-between-a-rock-amazon-and-a-hard-place-wal-mart-1488295383

So true..

Quote:

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We also believe food remains a work in progress, the online customer experience on mobile and desktop is rapidly improving but still evolving, and pharmacy changes likely still take time.

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The worst experience in any store is checking out, especially the grocery store.

This order online, then pick it up in 15 minutes would be interesting. I would try it for sure. Probably become addicted to it, making me more intolerant to lines and incompetent checkers than I already am.

https://www.bloomberg.com/news/articles/2017-05-25/amazon-opens-grocery-pick-up-kiosks-in-seattle-in-shopping-shift

If Amazon can do this nationwide, can you imagine what the future stock price looks like? The have already started their own private labels for many consumables such as batteries. I can see that greatly expanding. Amazon Peas anyone? Seriously though, the sky's the limit here.

We pretty much exclusively shop at our supper target. Its never crowded like Walmart of king soopers.

And their red card gets you free shipping with no minimum online, 5% off and 5% for subscription orders.

Most of what we get we buy their market pantry house brand.

I suspect you'll see more of the amazon grocery pickup points in the near future. It works really well. I login, select what I want, and then schedule a time to pick it up. Drive up, say who I am (for the first time) and they bring it out to me. Don't even have to get out of the car. Now that I have been there, they recognize my car license plate and bring it out to me automatically.

If you don't already have the amazon prime credit card with the 5% cashback, you will definitely want it if amazon groceries take off across the country.

This will be a game changer. We are witnessing change in retail at unprecedented speed. Companies that merge online and semi instant gratification are going dominant soon. Amazon has no real competition in this area.

Interesting times for retail. Amazon has single-handedly disrupted the entire industry throughout the supply chain. On the logistics side of this, companies are still trying to figure out how to react and plan appropriately for Amazon's entry into air. It's greatly impacted UPS specifically. FedEx not as much, yet.

Regarding Target, the other angle not yet mentioned is CVS and Wal-Greens. They are as prevalent as Starbucks in an urban/suburban area...especially urban. We haven't set foot in a target in a few years simply because we typically only need a few things and it's a hell of a lot easier getting in and out of one of the dozens of CVS stores near us than going to Target. I would love to see Targets take on how they consider these two in their competitive analysis and strategies. They are basically mini-Targets at this point. With CVS, even the colors and logo are similar to Target. Throw in that most people probably have their employer based drug plan set up at a CVS or Wal-Greens and you have another built-in reason to go there.

Jimmie Dimmick said:

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Cornell has gone on record many times that they are not a full service grocer and do not want to be. He sees food as a fringe part of their business designed to get a few more items in your basket. Some of the renovations relate to shifting their food offering to be a little more organic and niche, not expanding it. If this doesn't produce the results they want, expect them to pull back on food overall.

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It is also to generate foot traffic. Regular Targets stores average about $45/transaction. The purpose of the small grocery section is to lure in more customers. Ones that would of stopped on the way home at a Walmart super center to get what they need can now stop at a regular target. Pick up a few grocery items for dinner that night and buy regular items and impulse buys when they come in.

If they don't have at least a small food section, they lose that business completely. Highly unlikely a parent on their way home is going to make a second stop if they don't have to.

Problem is amazon. You can order your non food items, and now even non-perishable foods and be delivered the same day in a lot of areas. Eliminates the need to visit target at all. Even H-E-B as started H-E-B to go. For $5 they will pull your groceries for you. Not having to even get the kids out of the vehicle and wait in line. Pull up and they lid your groceries for you.

Very good points. My employer plan is through CVS. We have a Walgreens near the entrance of our neighborhood. You can damn well bet i will pay more for a couple of items at Walgreens then going across the street to target or Walmart.

If I can wait 2 days, it is coming from amazon anyway.

I don't see buying Target stock right now regardless of the multiple. Incredible head winds on all fronts.

Another note on Target, they recently brought their e-commerce function all back in-house. They had outsourced it all to India (I assume) and the new CIO quickly realized e-commerce is the future for retail and that your online presence isyour business. Previous CIO must have been a moron not to see this.

They also had almost no IT strategy so he killed dozens of projects underway and focused them on core efforts. Interesting article if you can find it.

The real tipping point is coming. Right now, vendors are setup to provide products prepped with brick and mortar in mind. Garments come from the factory with hangers on them. Nothing is e commerce ready and has to be manually removed from the hanger and prepped for online sales. Small products are packed in larger packaging that is designed for exposure on a shelf. All of this extra prep and over packaging is waste of money.

Once vendors sell more e commerce then b&m, you'll see them switch to where they manufacture and pack to e commerce first, and when it happens, online will see a significant advantage due to higher margins, and b&m will have to carry the burden of requiring additional prep work before sale. That is when you will see the death of many b&M stores that rely on high turns of low margin product to survive.

Foamcows said:

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The real tipping point is coming. Right now, vendors are setup to provide products prepped with brick and mortar in mind. Garments come from the factory with hangers on them. Nothing is e commerce ready and has to be manually removed from the hanger and prepped for online sales. Small products are packed in larger packaging that is designed for exposure on a shelf. All of this extra prep and over packaging is waste of money.

Once vendors sell more e commerce then b&m, you'll see them switch to where they manufacture and pack to e commerce first, and when it happens, online will see a significant advantage due to higher margins, and b&m will have to carry the burden of requiring additional prep work before sale. That is when you will see the death of many b&M stores that rely on high turns of low margin product to survive.

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It's already happening though. Look at all of the bankruptcies in the last 24 months in retail. Too much glut in b&m while online only clothing is blowing up. My wife now only buys clothing from essentially two places - MM Lafleur which is a higher end, online only retailor that caters to professional women and Cole Haan.

I've used Trunk Club which was probably one of the pioneers in online retail. They now have flagship b&m stores in large markets like Chicago and Dallas that promote the shopping experience. Full bar with free alcohol, personal stylists, etc. That is the future of b&m. Select flagship stores bolstered by a large online presence and distribution model.