Wall Street’s Favorite Retailer? Target, Not Amazon
Whatever the sales growth rate of digital retail channels compared to brick-and-mortar, there’s one arena in which a few relatively traditional retailers are coming out ahead this year: the stock market. Forbes reported that year to date, shares of Walmart and Target are up 32.84% and 100.44% respectively, while Amazon’s shares are up just 19.22%.
That’s in contrast to 2018, when the e-commerce giant was ahead of the two store-based operations by a wide margin. It’s also a surprise to analysts who were ready to consign traditional retailers to the dustbin.
Is it a reversal of fortune for traditional retail? Yes and no. The answer is yes for Walmart, Target and other retailers that have gotten their business models right, as evinced by sequential quarterly increases in same-store sales. For others—eh, not really.
“Target results, combined with those of other retailers, demonstrate that consumers still do want to shop in stores if they are offered the right combination of merchandise, price, environment, and convenience (including digital options),” equity analyst John Zolidis of Quo Vadis Capital told Forbes.
Target, Walmart and TJX Companies “are getting this done,” said Zolidis. However, he added that Kohl’s, JCPenney and Macy’s “have not done so much.”
What Walmart and Target have done lately is to make sizable investments in “product and merchandise technology that have changed the rules of the game in retailing, by merging in-store and online sales,” Forbes reported. “And they have leveraged their local presence to provide same-day delivery.”
Elaborating further on Target’s strategy, Zolidis argued that the company is taking market share through “a combination of compelling private label, attractive prices, a shopping environment that consumers like, and an enhanced offer via digital engagement and convenience.”
At enterprise software company Formation, CEO Christian Selchau-Hansen offered further insight into how Target’s strategy compares with that of Amazon.
“In looking at Amazon Prime and Target’s Circle program, it’s interesting to contrast the two programs in terms of their primary value to customers,” he told Forbes. “With Circle, Target is giving customers pricing benefits for every purchase. At its core, the program is around increasing value.”
That represents an interesting contrast to Amazon Prime, said Selchau-Hansen. There, “the primary benefit is to enhance convenience by offering two-day shipping and, more recently, free returns. With Prime, Amazon is betting on making shopping online more convenient, increasing time saved for customers.”
For comments, questions or concerns, please contact Paul Bubny
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