This paper analyses the retail management strategies between two of the largest retailers in US- Target and Walmart. The products of comparison concerning strategy analysis shall be microwave ovens and cooking oil.
Part A: Strategy Analysis
Walmart stocks 19 brands of microwave ovens while target stocks 10 brands. Both Wal-mart and Target focus on retailing the countertop microwaves instead of the over-the-range microwaves. There is high differentiation between the different brands in terms of power, functions (defrosting, grilling, and cooking, among others). Wal-Mart, which has more brands, offers its clients more varieties from which to choose. Wal-Mart offers its products at a cheaper price. For instance, a microwave oven under the brand name Oster variety RCA 1.1-cu retails at $69.99, while the Panasonic 2.2 cu ft retails at $157.99 at Wal-Mart’s stores. The same brands retail at $84.99 and $160.99 respectively.
In terms of the display of products, Wal-mart has displayed its products at the general area on “home products” then a more specific area labeled “home-appliances” then “kitchen appliances” and lastly “microwaves” section. Target’s microwaves are displayed at the an area labeled “home products” then “kitchen products” then “kitchen appliances” then “microwaves” section. Varieties of each brand are put together for easier selection of a specific variety from a given brand. This makes it easy for shoppers to locate the products . In order to boost its sales, Wal-mart offers some of the microwaves on a Rollback promotional mechanism. Target has opted to give time-bound offers on its microwave ovens and other home appliances. Target has an offer of up to 50% on all the home and kitchen appliances during the Black Friday in July.
The products in both Wal-Mart and target are displayed in the spacious, lowly shelves although Wal-Mart has wider and more spacious shelves. Wal-Mart unlike target does not display samples microwaves out of their boxes to allow customers to view the actual product.
Wal-Mart operates chain stores or supermarkets. Its strategies on display, sales promotions, packaging, pricing and several other features are similar in all its stores and this assures customers of consistency. Wal-Mart is addressing the needs of the microwave ovens market by offering numerous brands on a rollback promotional strategy. Its target market includes families and individuals with modest incomes. It is using its stature as the largest retailer in the US to purchase the products in bulk, obtain discounts from suppliers, create sensible sales margins, and sell at low prices to attract customers to purchase not only microwave ovens but other products as well. Wal-mart can adopt more vibrant displays of its microwave ovens in order to increase customer interaction and consequently sales of the products it is offering on rollbacks.
Target’s strategy is also working. The store is maximizing on how to reach its target market of individuals with medium incomes. Its pricing structure and its promotional strategies can allow its customers to purchase the products on offer within specified timeframes. Target can increase the number of brands on its stores and lower the prices slightly in order to offer their target market more variety and suit more diverse needs and preferences.
Both Target and Wal-Mart stock cooking oils with 6 brands and 4 brands respectively. The varieties in each brand are differentiated by the main vegetable such as sunflower, olive and canola. Target also features similar varieties with varieties such as oil baking sprays. Wesson is the leading brand in both stores.
Wal-Mart retails its cooking oils at a higher price compared to that at Target stores. For instance, Wesson pure vegetable natural oil, 1 gal retails at $7.22 while the same quality retails at $6.99. The differences in pricing can be attributed to the target market where Target stores target young and homely mothers with tendencies to cook and might therefore be very sensitive to high process of home consumer goods.
In both stores, the cooking oils are displayed at the ‘home products” section under the labels “fats and oils”. The display of the products is among other food items close to flours, pastas, rice and other dry foods. The products are placed in lowly shelves to ease how consumers spot and obtain it from the selves.
Wal-Mart’s promotions on the cooking oils are free shipping for purchases of on order exceeding $50 of the product. Target has a sales promotion targeting the products during a sale week on July 5th -July 11th. Holders of a target ‘red card’ get a 5% discount on cooking oils and other products. Such customers can also get free shipping for purchases exceeding certain quality.
The sales strategies that Wal-Mart and Target have adopted to sell their cooking oils are very similar and effective. Target has a more appealing sales promotion since it targets young working mothers and who are likely to be sensitive to prices of home consumer goods such as food stuff.
Part B: Store Analysis
Target stores have an energetic and welcoming atmosphere. Although they do not play music in the stores, there is an adequate mix of colors and lighting to bring about enthusiasm and energy especially among youthful shoppers. The stores use fluorescent lighting. The walls are painted white at the bottom while the upper parts are painted red. This creates a mood of easiness, warmth, energy, and love.
The major target market for Target stores is the young mother or the “boomer mom”, who “lives in the suburbs” and who “wants it all”. The median age of the shoppers is about 40 years and as such caters to many parents who shop with their children. A good number of teenagers attracted by the energy and hype at the stores are always present at the stores. Many of the shoppers can be placed in the category of working class mothers.
The stores are very clean. The bright colors and bright lighting brings about a sparkling effect that makes the customers feel the energy at the stores. Target stores are highly organized with adequate space on the isles .
Target uses a combination of grid and Racetrack layout. Have main “action alleys” serving as loop. Departments are in nodes setting up the grid layout. There is also compact display of products allowing shoppers to view several items at glance and select the one that best appeals to them. The items are displayed on lowly shelves with some samples on display.
Concerning the ongoing promotions, the stores are running a July sales promotion in which they reduce the prices of products to nearly as much as 50%. The staff is highly professional and warm in their approach. The staff comprise mostly of youths who show energy and enthusiasm working at Target .
Target has great presentation of its stores to appeal to its target market. However, the stores can increase the isle spaces in the stores in order to offer customers more room for trolley movement and accommodate the parents who shop with their children.
Wal-Mart has an atmosphere of relaxation that maximizes on customers spending ample time in the stores shopping. The store has fluorescent lighting throughout the stores. It has cool colors on the walls to appeal to customers. Pastel matte blue dominates the walls. Grocery section has a pale yellow color while parts of the lower halves of walls have dark blue colors. The colors create an atmosphere of relaxation making customers want to shop more. There is no music or scents save for the scents unique to sections such as pastries, grocery, and home care products among others.
Wal-mart Caters for demographics that are more diverse and not necessarily the young. There is a great mix of the young and the old with fewer young mothers and more people aged over 40 years . The stores are very clean. The shelves are big, spacious and the isles are spacious to ease the movement of shoppers. The store is highly organized with adequate labeling and staffs positioned strategically to assist customers locate products and any other form of assistance.
Wal-Mart offers several products especially electronics and other durables on a Rollback promotional mechanism, which is a change in the price of a product. The suppliers of different brands give Wal-Mart discounts on their brands after the stores buy in large qualities. The stores can then sell at discounts, make small profits per item but sell large numbers of the discounted products. The staff at Wal-mart is warm, friendly, and fun. A reassuring smile is common with Wal-Mart employees in order to make the customers feel at ease to continue shopping.
Wal-Mart uses a combination of grid and Racetrack layout. Have main “action alleys” serving as loop. Departments are in nodes setting up the grid layout. The products are not displayed close to each other and they are placed on spacious shelves.
Wal-Mart can increase its sales by accommodating vibrant lighting to appeal to young shoppers. However, it should continue on its strategy of space productivity, which has won it loyal customers and given it a unique competitive edge.
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