Walmart vs. Target – Discount Heaven

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Walmart and Target Eager to Greet Customers; Costco Says Thanks but No Thanks

According to the National Retail Federation, approximately 35 million Americans visited stores or retail websites on Thanksgiving Day in 2012, making the day a key sales driver for the retailers. Walmart (WMT) and Target (TGT) are once again vying to gain the attention of shoppers through steep discounts, while Costco (COST) is committed to its employees and plans to stay closed on the day. Nonetheless, in the spirit of the holiday season Costco has inevitably started offering seasonal discounts since November 24 and plans to introduce more deals as Black Friday approaches.

Where to Shop for Turkeys and Turkey Fryers

The two items most likely to be bought on Thanksgiving are of course turkeys and turkey fryers. Walmart seems to be a better option to shop for these two products, as the retailer provides a wider range of turkeys, including brands such as Butterball, Dak, and Jennie-O.

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Walmart Announces Change at the Helm, Gears up for Changing Trends

Forty-seven year old Douglas McMillon is set to take over the helm of the company upon the retirement of the current CEO, Michael Duke in February, 2014. This announcement was made by Wal-Mart Stores, Inc. (WMT) on November 25, 2013, and makes McMillon the youngest CEO in the history of the company.

Walmart’s new CEO is currently the head of Wal-Mart International where he is responsible for overseeing the company’s operations in over twenty-six countries. His appointment as the fifth CEO of the company is indicative of the company’s acceptance of the fact that it is now experiencing a phase with ‘changing customer demographics’, one that is increasingly international and increasingly online as well.

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Walmart Forced to Recall Donkey Product in China

The world’s largest retailer, Walmart Stores, Inc. (WMT) was forced to recalled donkey meat from some of its stores in China when tests found the presence of the meat of other animals, particularly fox. Fox meat is cheaper and is also considered harmful for human consumption because of the presence of parasites.

Shanghai Daily reported last week that a shopper with the surname Wang, bought 1,600 boxes of donkey meat from a Walmart store in the city of Jinan. According to local reports, he sent the meat for testing after he felt that it smelled strange. Tests proved that the product contained fox meat.

Donkey meat is a popular snack in China, but fox meat, a by-product of the fur trade, is far cheaper.

The donkey meat at Walmart stores comes from a Chinese supplier. Fox meat sells for around $1 per kg, according to a fox breeder surnamed Xue, who was interviewed by Shanghai Daily. This makes it cheaper compared to donkey meat, which could have been the incentive for suppliers to add it to donkey meat.

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Holiday Season Retail Trends for Walmart, Costco and Target

Holiday season is not only a time of celebration for shoppers but for retail giants as well, as the latter generate their highest quarterly sales during this period. The holiday season, starting from Thanksgiving and lasting through New Year’s Day, gives rise to discount wars between major retailers to attract more traffic. Investors also keep an eye on companies’ stocks, since retailers with the best deals usually attract the lion’s share of revenues, boosting the share price.

Higher Sales during Holiday Season

The US consumer staples retailing industry generates roughly 21% more sales during the holiday season compared to other quarters. However, over the last three years, Costco (COST), a key player in the consumer retail segment, saw its sales in the US fall around 3% during the fourth quarter, because the company loses out on deals and discounts against its competitors like Walmart (WMT) and Target (TGT).

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Will Wal-Mart Overtake Amazon as the No. 1 Online Retailer?

Bearish sentiment for Wal-Mart Stores (NYSE: WMT  )  has increased over the past few months, which is indicated by a 54.3% increase in the short position on the stock since October. Most of these people likely turned bearish because Wal-Mart announced that its customers weren't spending as much as they had in the past. However, you might not want to read into this statement too much.

First off, any sell-offs in the stock related to that news likely have already taken place. Second, the data breach at Target (NYSE: TGT  ) , its closest brick-and-mortar competitor, will likely lead to market share gains for Wal-Mart, especially since Target sees a 2.5% comps decline year over year, much weaker than the previous expectation of comps coming in flat. Third, despite Amazon.com (NASDAQ: AMZN  ) maintaining a clear advantage in online sales, Wal-Mart still has a massive amount of capital available, some of which will be used in an attempt to catch Amazon online.

Unrealistic dreams?

Wal-Mart's expected online sales for 2013: $10 billion. Not bad, but still nothing compared to Amazon, with expected online sales for 2013 of $74 billion. Given these numbers, it might seem inconceivable that Wal-Mart has any chance whatsoever of catching Amazon as the No. 1 online retailer in the world. One thing is for sure, Wal-Mart is the clear underdog, especially since Amazon's technology allows it to change prices 2.5 million times per day, giving it a substantial price advantage over Wal-Mart.

In other words, Amazon can better target the value-conscious consumer with adjusted lower prices on specific products. Wal-Mart's price changes in November: 52,956. It's unlikely this number has changed much in comparison to Amazon.

But there are still several reasons not to underestimate Wal-Mart.

Aggressive planning and deep pockets

Wal-Mart plans on spending $0.10 per share on e-commerce development in 2014. The majority of this capital will likely go to investments in technology labs. Most people don't know this, but Wal-Mart has purchased eight technology labs over the past three years. These labs have produced several quality innovations, including a Social Genome product that collects data from social-media sites for information. This product allows Wal-Mart to see what millions of their customers are talking about online. It can then use this information for better merchandising and marketing.

Wal-Mart can also inform its customers, or family and friends of its customers, about discounts on select items. Another success is the Crowd-Sourcing Project, through which customers can vote for products they want to see on Walmart.com. This is in addition to mobile apps.

Additionally, Wal-Mart wants to find a way to offer same-day delivery for products purchased online. But it must plan carefully to avoid any significant hits to margins. At the moment, in-store pickup is a positive for Wal-Mart, because it sometimes leads to customers shopping in the store. This then leads to increased sales.

As far as online performance, Amazon.com currently has a global traffic ranking of 8 and a domestic traffic ranking of 5. Walmart.com has a global traffic ranking of 140 and domestic traffic ranking of 31. The good news for Wal-Mart is that it's performing well online.

For instance, over the past three months, the bounce rate (where a visitor views one page and leaves) has declined 5% to 29.6%, page views-per-user has increased 12.1% to about 6.7, and time-on-site has improved 8% to 5:48.

That's the good news. The bad news is that Amazon.com, despite its online lead, is growing even faster. Over the past three months, the bounce rate has dropped 29% to 28.2%, page views-per-user has increased 30.6% to 11.1, and time-on-site has improved 38% to 9:17. These are astronomical numbers.

For the record, Target.com has a global traffic ranking of 241 and a domestic traffic ranking of 52. Over the past three months, the bounce rate has increased 2% to 30.3%, page views-per-user has slipped 1% to 4:9, and time-on-site is flat at 4:29. Nothing to panic over, but not impressive.

Read More : Wal-Mart Overtake Amazon

Wal-Mart Company Description

Walmart is the largest retailer of consumer staples products in the world. It was founded by Sam Walton in 1962, who started with the idea of a store that would offer its customers the lowest prices in the market. Walmart was incorporated in 1969 following the success of Walton’s ‘everyday low prices’ pricing strategy. It currently operates in 27 countries around the world. The company drives growth by expansion in its retail area and investments in e-commerce. Nonetheless, it has underperformed its competitor, Costco over the last few years due to the Costco’s better customer service record. Walmart has lost customers to Costco over the years, primarily because it doesn’t pay its employees well, which has led to demotivation in the workforce and poor customer service. Read More: WMT