Analysis Of The Article ' Unequal Competition Among Chains Of Supercenters ' Kmart, Target, And Walmart '

One of Target’s strengths is that it’s one of the largest retail outlets. Target is a one stop shop for its consumers. Target

Supercenters, such as Wal-Mart and Target, offer both experiences of budget-based department store items, drug store items, home goods, office supplies, furniture, and groceries. This enables the store to grab the attention of the shopper with multiple purchases to make, and who

1. The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive

Wal-Mart and Target are both great retail stores to go and find a good bang for your buck shopping experience. After researching both companies, it appears they have the same ideas as a mission, saving the customer money. Wal-Mart Mission statement reads;

In the United States, the food retail industry is absolutely massive. According to Statista, this industry brings in nearly 5.27 trillion dollars annually and 594.4 billion of that is from grocery store sales. In this market, the 20-ton gorilla in the room is Walmart, racking in nearly 20% of the entire market at around 118 billion dollars in 2013 according to the Harvard Business School case study. Following Walmart, Kroger and Costco own the biggest next largest slices bringing in 76 billion and 71 billion respectively. In this highly competitive market that has some of the smallest margins of any industry it can be tough to get ahead and even tougher to grow. However, Trader Joe’s has managed to pierce what was once a very small world

When it comes to Services, Wal-Mart also has the upper hand. In many stores they offer: a Bakery, Meats, Photo Centers as well a on site photographers, Automotive services, Hair Salons, Banks, Optical Offices, Pharmacy, Nail Salons as well as restaurants such as McDonald's, and Subway. Target has rivaled many of these services providing in store Starbucks, Taco Bell/Pizza huts, and the most recent advance is an in store clinic. Even with these amenities it is still far behind Wal-Mart in the services department.

Grocery shopping is more diversified and evolved than ever before. Individuals across the nation have access to everything from exotic products to unique delivery services. Often, specialty stores have limited locations whereas specialty services have a limited reach. However, two retailers have expanded to hundreds of locations while adhering to unexpected market positioning for previously untargeted market segments. Whole Foods Market and Trader Joe’s have become household names while also innovating beyond regional and national traditional chains. Despite comparable size in

Mirzayev, E. (2015, July 7).Target vs. Walmart: Who's winning the big box war? Retrieved from

The US warehouse club and superstore industry includes about 20 companies; however the major competitors that Costco faces are Sam 's Club (owned by Wal-Mart), BJ’s Wholesale Club, and Meijer. The club superstore industry is so competitive that these four companies alone hold over 90 percent of sales. These superstores are able to offer competitive pricing because as large companies they can offer a wide selection of products and have purchasing, distribution, marketing, and financing advantages. Due to low margins, the profitability of these individual superstore companies depends on high volume sales and efficient operations. This is where Costco has been able to succeed and set itself aside from the competitors.

Grocery industry is a highly competitive market with thin profit margins. Super markets are dominant players in the grocery industry. They use grocery offerings to drive traffic to their higher profit margin retail items. With its operations efficiency, Walmart, the largest grocery retailer has been able to offer significant price drops. This also forces other grocery stores to drop prices which keeps the profit margin thin. Even with all the advantages of operational efficiency and economies of scale, Walmart’s share in grocery sales was down at 51% in 2011.

This will allow more products to be placed on their shelves in view of customers and allow prompt more purchases to be made by customers. Hopefully, the massive amount of money (five billion dollars to be exact) Target plans to spend on upgrading the distribution and technology aspects prove to be beneficial and more efficient for the chain of stores and its customers (Marshall, Solomon, Stuart, 2012). Target will also have the opportunity to increase their selection of online items (Marshall, Solomon, Stuart, 2012). These changes will also make the order online and pick-up in store option more streamlined since there will more of a designated space for those pick-up orders and will provide for easier access to those items once they have arrived at the store. Target needs to locate that fine line between offering a wide selection of items in their store and the point at which it just becomes overwhelming and ineffective shopping for the customer. If Target decides to continue providing the vast variety of items in-store they could benefit from utilizing a form of shopping called “showrooming”. This is used to allow the customer to visit the store in person to view and experience the product just as they would in a showroom, then make the final purchase online (Kalyanam & Tsay,

Our Supercenters were developed in 1988 to meet the growing demand for convenient, one-stop family shopping featuring our famous Every Day Low Prices. We save you time and money by combining a full grocery and our general merchandise under one roof.

Stores like Wal-Mart are famous for keeping their prices so low. This is one reason why they are able to maintain a grip on the consumers of an area. They accomplish this by keeping the cost to produce and transport the goods low. In January, a study by the Los Angeles County Economic Development Corp. found that, “an individual family could save $589 a year on groceries by shopping at a supercenter. Overall, shoppers could save $3.76 billion in merchandise nationwide.” (Blazier, A, 2004) A major reason they can keep prices lower than mom-and-pop run businesses is their ability to buy merchandise in bulk. Buying in bulk works the same way it does for a consumer. The more of a product that is purchased, the less the cost is per unit. Consumers see this every day when they go to stores like Sam’s Club or Costco. When they buy their merchandise in bulk, they are able to offer it to the consumer at a lower price. (Kale, 2011) This is what could eventually drive the mom-and-pop owned businesses out of the area, and draw a negative criticism from the public. The interesting thing about this criticism is that the public complains about Wal-Mart

The traditional logic of retailing therefore does not completely apply to Wal-Mart. The ambience of shopping is secondary to the price savings and the trust its most loyal customer segments have in the quality and availability of products. What gives Wal-Mart such a competitive advantage on pricing, availability and the quickness of rolling out new stores is their supply chain management (SCM) practices and strategies, considered one of the best worldwide (Mottner, Smith,

The giant retail store today has just started with an idea from Sam Walton back in the 50s. He opened a five-and-dime Walton store in March 1951, with just a small capital, with a new concept in the retail industry of offering his low-priced products. He believed that if he keeps his prices low, even to the point that his margins are just dimes, he could beat other retailers and profit through volume. Sam Walton’s first stores were so successful that the owner of the building, which he was renting, thought he would profit more if he break lease contract with Sam Walton and instead run the same business.