Walmart is considered the true champion when it comes to retail in the United States and also in other emerging markets. However, as the retail segment iss getting crowded, there is a strong competitive battle that’s going on with Target, which is carving out market share from Walmart’s core area of competency.
When it comes to Walmart, it’s visible that they are still holding their decade-long promise of providing customers the option to make value buy. Whereas, in Target, it can be witnessed that the brand is more focused on profitability and considers the hip culture of the youth and does its branding targeting that segment.
Both companies are investing in technology and are implementing tools like RFID automation or AI in the predictive analysis of the product. In this blog, we will look into the business model of both these organizations and find the areas where one can find significant changes.
Business Model of Walmart
When it comes to Walmart, the sheer size dominates everyone. It operates with more than 11,500 stores which are under operation, and the United States is the largest market where the company operates.
In terms of size, it’s five times larger than its nearest competitor showing the steady dominance of the company in the current times. The key benefit of Walmart is that it has high inventory and asset turnover that helps the brand generate dollars from each of its stores.
Business Model of Target
Target is the new upstart, which has 2000-plus stores under operation. However, it gets 30% of its revenue from e-commerce sales, making it a dominant brand in the new space. The business model of Target is built on running smaller stores, and the company uses its marketing to create brand loyalty with customers.
The company focuses on the net income and works to provide better profitabiltity to the shareholders of the company. However, the business is creating a brand appeal to the youth customers, making the retail store their place of shopping from the offline and online mediums.
Areas Where Walmart and Target are Different
There are multiple areas where both companies took different approaches and are using their management style to get more customers.
Analyzing Consumer Behaviour: When it comes to using consumer behavior, Target is much ahead in the game as it dominates the online space and, therefore, can provide products that are required by the customer base.
Use of Private Labels: The use of private label brands by both companies is different, and they are now using different models to sell their products. Walmart they are using RFID inventory solutions as it can keep better inventory turnover as its prescence gives the brand a competitive advantage.
Areas Where Private Labels Are Similar
There are areas where both brands use the same type of model in operation.
Utilizing Assets: When it comes to utilizing the real estate assets of the company, both brands use that to give them a competitive advantage.
Finally, in the retail space, both these companies are making a name by choosing a channel approach to reach their customers.
