Target and Walmart’s 3Q results are just – Wow!

Discussion
Photos: Target; Walmart
Nov 18, 2020
George Anderson

The strong simply continue to get stronger in the retailing world of 2020. Two prime cases in point are Target and Walmart. Each reported outstanding third-quarter results — earnings, sales and market share gains — as they continue to find ways to get consumers to say “yes” to the wide variety of products they are selling and services they are offering.

Target reported a combined digital and physical location sales increase of 20.7 percent for stores open at least a year. The chain’s online business jumped 155 percent during the quarter, while the dollars rung up at its physical locations increased 9.9 percent.

Target continued to report growing acceptance of its same-day services, including in-store and Drive Up order pickup, as well as deliveries made by its Shipt subsidiary. Target recently announced it was doubling up on the number of Drive Up parking spots in its lots as the service, available through its app, has proven increasingly popular with customers during the pandemic.

“We’ve seen a deepening level of engagement and trust from our guests. The result is unprecedented market share gains and historically strong sales growth, both in our stores and our digital channels,” said Target CEO Brian Cornell in a statement. “In preparation for the holiday season, we focused first on the safety of our guests and our team, making changes to eliminate crowds while enhancing our fast-growing, contactless options like in-store pickup, Drive Up and Shipt. In a holiday season that will feel different for our guests, we’re committed to helping them navigate the season safely, as they find new ways to celebrate with family and friends.”

Walmart was not exactly a slouch during the third quarter either as the retailing giant posted a 6.4 percent gain in same-store sales, picking up market share in food, general merchandise and health and wellness categories.

The retailer’s online sales jumped 79 percent during the quarter as its various delivery and pickup options continued to buoy performance. Walmart also formally introduced its Walmart+ unlimited delivery service from stores for a $98 annual subscription fee. The chain also said it has more than doubled the number of personal shoppers it has on the job to fill customers’ pickup and delivery orders during the holiday season.

DISCUSSION QUESTIONS: What do you see as the relative strengths of Target and Walmart at this point in time? Where do you see further opportunities for improvement at each retailer?

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Braintrust
"Both retailers will be even better positioned after weathering the COVID-19 storm as the discretionary categories that power profitability begin to reignite."

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29 Comments on "Target and Walmart’s 3Q results are just – Wow!"


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Neil Saunders
BrainTrust

Both retailers have done phenomenally well over the past half-year. There are some common factors in this success. Both are essential retailers and so have remained open for the whole of the pandemic. Both sell food which has driven sales and foot traffic. Both have very solid digital operations which have supported growth. Both are good operators which get the fundamentals of retailing right.

However, in my view, Target has a slight edge and this can be seen in its growth numbers. Target is less reliant on lower-income shoppers than Walmart and the financial pressure on this group over the past quarter has reduced their spending power on discretionary items. However the main difference is that Target has a very strong range across home, apparel, and so many other categories. People like visiting Target stores (even during a pandemic) and they are always tempted to buy. That’s why traffic is up at Target, but down at Walmart. It’s all about knowing how to become a retail destination – and boy does Target get that!

Mark Ryski
BrainTrust

The biggest players have made the most of the difficult circumstances the pandemic presented. Weaknesses were exposed for the marginal players, and Walmart and Target expanded their competitive leads. The success of these leaders was not an accident. They were well on their way by offering new services like curbside and refining their online selling and while offering new services was critical, what doesn’t get the attention it deserves is how brilliantly these retailers have executed. Walmart and Target will lead the industry through 2021 and beyond.

Gary Sankary
BrainTrust

I could not agree more – Target and Walmart were already positioned for success with their investments in digital capabilities. They also took the lead on health and safety issues, before many local governments woke up.

Shep Hyken
BrainTrust

These savvy retailers met their customers where they wanted to be met – both online and in-store. The pandemic caused a surge in the convenience of online shopping. The in-store experience was changed to give customers confidence in their health and safety.

Chuck Ehredt
BrainTrust

These results represent little surprise – albeit the size of gains are larger than expected. Both companies understand their customers very well, responded quickly and professionally to the pandemic, and managed expectations with their customers and supply chains in a very proactive and clear way.

The combination of factors creates a much deeper sense of loyalty – and when people are nervous about many factors affecting their lives, they go to the low risk option.

Lee Peterson
BrainTrust

Walmart embraced innovation and moved quickly to implement the services and methods of operation the customer wanted most — because they had to, sure, but hey, they did it fast. And Target’s brand and customer base helped propel them forward, even though they were and probably always will be a fast second. Of course, being essential in the spring didn’t hurt either one, but moving quickly to what the customer wants is the answer now and going forward. Bye bye operations-driven, hello customer-centric.

Richard J. George, Ph.D.
BrainTrust

Both Target and Walmart have fully embraced the concept of omnichannel. They realize that omnichannel is not about channels. It is about customers. Both retailers have done a terrific job of providing seamless convenience and breadth/depth of offerings during these trying times. Both have upped their games in terms of online shopping and collection. Plus, enhanced investments in their stores and staffs are evident in their respective performances.

Carol Spieckerman
BrainTrust

Convenience, safety, and speed. Walmart and Target are taking different approaches to achieve them, yet the results speak for themselves. Both retailers were set up to weather the COVID-19 storm better than most purely by accident (who actually saw it coming?). Once COVID-19 hit, the arsenal of convenience options that both retailers have amassed quickly morphed into safety enablers. Going into the holiday season, speed layers on as a third driver that will support all of the same initiatives, from BOPIS to home delivery. Both Target and Walmart have wildly departed from their insular pasts to embrace partnerships and acquisitions as a means of stoking innovation. Both retailers will be even better positioned after weathering the COVID-19 storm as the discretionary categories that power profitability begin to reignite.

Brett Busconi
Guest

Both companies were much more prepared for the must-haves of 2020, given their previous tech investments around both BOPIS and delivery. The fact that they can offer so many products/services through the utilization of that technology allowed them to be a go-to from the jump and then they picked up their COVID-19 game plans at pace to make sure that they were everywhere they needed to be. Further opportunities surround additional products/services provided as well as increasingly loyal clients based on how much these brands “were there for them/their families” in these times of need.

Rich Kizer
BrainTrust

These giants are so good that they literally can take almost any market challenge and look brilliant. That’s how they focus on their business, and teach a lot of other retailers.

Camille P. Schuster, PhD.
BrainTrust

Offering a variety of products, seasonal products, and food products enables one-stop shopping which is attractive to consumers. Ensuring the safety of employees and shoppers is appreciated by many. Experimenting with and offering a variety of ways to get products (delivery, in-store, and curbside pickup) creates convenience. Both retailers deserve credit for adapting to consumers’ needs. One other possibility might be to change product assortment to those products needed at home, those products that can provide fun at home, and new products for individual and family engagement at home.

Paula Rosenblum
BrainTrust

Stunning results. I attribute profitability and the ability to satisfy customers to technology investments made well in advance of the pandemic. And regional distribution centers and stores that help fuel the revenue flames.

It’s not an accident, and it’s not just because of size. It’s a.) technology investments made in advance of the pandemic, b.) agility and c.) power with suppliers.

Both these companies have CEOs that “get it” and are willing to invest. Even Target’s willingness to deliver via Instacart along with its self-owned Shipt shows cleverness in using all tools to meet demand.

And hey! They didn’t even have to buy their own airplanes!

Gene Detroyer
BrainTrust

Old habits die hard. Sometimes it takes a pandemic to change someone’s shopping habits. They change and develop new ones. Target and Walmart are the beneficiaries. Now they will become the new habits that will die hard.

They became the beneficiaries because they focused on their customers’ wants and needs. In both cases, the examples they instituted are all about ease and convenience. They are teaching customers new way to shop that will be thoroughly embraced in the future.

Jeff Sward
BrainTrust

Both retailers have excelled in both product and process. Value + convenience + breadth of product. They’ve leveraged the traffic from essential categories and prioritized safe shopping. They’ve integrated brick-and-mortar and e-commerce in a manner that the customer can truly view as seamless. And, especially in Target’s case, they started implementing this new age retail model long before the pandemic forced them to. These features evolved as an offensive business strategy, not as a defensive reaction to the market.

Mohamed Amer
BrainTrust

In times of crisis, consumers purchase with a strong bias to the brands and banners they trust. Target and Walmart have invested heavily to be centers of trust and certainty in turbulent times. Layer on top of that how consumers can identify with their local target or Walmart as employer and community supporter on top of being a one-stop-shop for most of their needs, and you have plenty of reasons why large retailers with the right assortment that execute well and deliver on values important to their customers will continue to flourish, especially in crises.

Richard Hernandez
BrainTrust

The ability to be flexible and nimble to steer huge ships like Target and Walmart is a testament to adapting to customers’ shopping habits due to the pandemic. Both companies have focused on the customer through technological improvements, associate training and process execution. Good work.

Dick Seesel
BrainTrust

The third quarter numbers may reflect Walmart’s recent commentary about softening of demand. Its customers have typically felt economic stresses more than Target’s, especially now that COVID-19 is spreading to less urbanized areas in the middle of the country. Nevertheless, I’d expect Walmart to perform well during the fourth quarter especially if customers start stockpiling essentials again.

But Target’s results are outstanding. It’s clear that the “ease of shopping” angle is working, but that’s not the only factor. When you look at Kohl’s 13 percent decline in third quarter sales (driven in part by the impact of virtual learning on back-to-school business), it’s clear that they are losing share to Target in apparel and soft home — a trend that started before the pandemic. Combine this with Target’s improved execution of groceries and commodities, and it’s a winning formula.

Lisa Goller
BrainTrust
Walmart and Target have invested in strategic pivots to improve the customer experience. That’s why they’re winning. Walmart’s new partnerships (Instacart, Shopify, thredUP) strengthen its e-commerce and value offerings, which are vital during the pandemic. Its low-cost leadership keeps essentials affordable to consumers with reduced discretionary spending. The Walmart+ subscription makes its grocery leadership even more competitive. Walmart’s October discounts capitalized on the booming pet market. Its recent divestments (Asda, Seiyu, Walmart Argentina) free up capital to focus on e-commerce and delivery ahead of potential lockdowns. That said, its abundance of stores remain under capacity as consumers limit their brick-and-mortar visits. Also, fierce rivalry means dollar chains, discounters and Amazon relentlessly try to erode its market share and margins. Target invests in a cheerful omnichannel experience for consumers and its associates. Its innovative app brilliantly minimizes the time in store so consumers feel safe. Fast delivery from stores gives it an edge with speedy omnichannel options. Target’s October discounts focused on apparel, kitchen and beauty, helping to delight women who seek affordability with flare. That’s… Read more »
Gary Sankary
BrainTrust
Target and Walmart continue to be rewarded for investments they’ve made in their digital commerce capabilities. We can all agree they’re providing customers with exactly what they want during the pandemic. They take safety seriously, they were ahead of the curve on mandatory masks, they manage store traffic and quickly stood up enhanced curbside. What I think gets a bit lost in the analysis of these companies, and what I believe is a differentiator between them and their less successful competition is how quickly they were able to pivot operations to deliver these services. Last year about this time we were all talking about about the challenges Target was having delivering omnichannel capabilities — that’s been solved. Going back to first quarter, both of these companies had work to do to scale curbside and delivery due to expense pressures. Those issue have been solved. I think the lesson here for retailers is one I learned early in my career at Target – Speed is Life. The speed of the changes that the pandemic brought to… Read more »
Di Di Chan
BrainTrust
Target and Walmart are innovation leaders in retail. Both companies invest heavily in technology as a means of growth and have hundreds of developers in their internal teams (based on their LinkedIn pages). Both companies’ development strategies help shape and measure the growth of new retail technology solutions. A strength of Walmart is to set the direction for the entire retail industry. Walmart tends to build a lot of their technologies internally from the beginning of the new technology’s market entrance (e.g., e-commerce, personalization, omnichannel approach, scan-and-go frictionless checkout) – this means they have more internal control over their own growth and they tend to have a larger external impact on what directions other retailers will follow with their innovation. A strength of Target is efficiency and collaboration. Target has a reputation of being more open to working with outside providers first. They are often not the first adopters when there’s a new technology on the market. They will typically wait until a new solution has gone through at least one iteration. At that point,… Read more »
Bob Phibbs
BrainTrust

We are fast becoming a country of just three retailers: Amazon, Walmart, Target. As more malls struggle and small businesses like New Mexico’s are told to close, the big only get bigger. Yes they had resources, vision, and leadership that knew what to do. Congrats on that. But when we declare a few businesses more viable than most everyone else these results ring hollow to me.

Bindu Gupta
BrainTrust

Target took a very customer-centric approach to gain market share during this pandemic. Every step it took both in-store and online was centered around safety and convenience of their customers which helped them retain existing customers and gain new ones. I anticipate it matching and even exceeding these results in 2021.

Joe Skorupa
BrainTrust

The tech investments and innovative programs that Walmart and Target made 5+ years ago enabled them to achieve their phenomenal success today. I have always said there is no justification for investing in expensive technologies, i.e., personalized websites, real-time supply chains, advanced analytics, omnichannel orchestration, etc. if your company isn’t growing and the marketplace remains static. You invest in expensive technology to reap rewards, as Walmart and Target are doing, as your revenue grows and the marketplace moves in unanticipated ways.

Doug Garnett
BrainTrust

Some part of the success of both stores must come from having established “safe places to be out” during this time of COVID. This is an experience that is unparalleled in power for consumers.

After all, especially as winter hits, our lockdown situations are increasingly boring. I realize I will end up spending a full year teaching on Zoom. My students are clearly suffering from the limitations on getting out.

But we can, at least, go to Target and look at electronics or clothes or skin care or … shopping for groceries is an even more significant event.

These more human realities may be behind a good part of Target and Walmarts strength financially.

Ricardo Belmar
BrainTrust
Both Target and Walmart owe their recent success to several areas: 1) Technology investment of the past few years to enable and then strengthen their omnichannel capabilities. They put the customer experience first and recognized it takes investing to create an environment where customers can shop with you anyway they like any time they like. Convenience is king and both invested in the necessary technology to enable that convenience well before the pandemic struck. Enabling easier ways to engage digitally with the brand played a big role here. 2) Being essential retailers! Yes, it matters when you’re the only game in town that’s allowed to be open. That meant customers developed new shopping habits with these two brands (plus Amazon) which they then kept once lockdowns were released. Customers learned just what they would get from a shopping and buying relationship with Target and Walmart in ways they never realized existed pre-pandemic. This may have been out of necessity, but the point is it worked. And it stuck. The convenience factors created by #1 certainly… Read more »
Harley Feldman
BrainTrust

This is a great job by both retailers to respond to their customer’s needs during the pandemic. People Buying Online and Picking Up in Store (BOPIS) can be satisfied by the consumer not having to spend time shopping and knowing their item is available and ready. This process can also be used by consumers to avoid going into the stores if they are worried about personal contact. Target has done a better job at this, but Walmart is not far behind. Customers are liking the offerings, and the demand for these services will continue in the future.

Further opportunities will come from lower cost at-home deliveries. Retailers are working toward delivery by existing carriers, Post Office, self-driving trucks and drones. This plethora of options will result in lower prices for delivery to the consumer meaning increased demand for the service.

Ryan Mathews
BrainTrust

They share lots of factors — great brand loyalty, innovative approaches to merchandising and consumers, smart use of technology, etc. The real difference is in the target (no pun intended) markets. Going forward growth is going to be tough because it will require both companies to move away from their core markets.