Cultural_Comparsion__Target_vs_Wal-Mart

Cultural Comparison: Wal-Mart versus Target 11/12/09 Introduction: Department stores had their origination around the same time. Around the turn of the twentieth century, department stores started appearing in New York and other major cities. They existed in similar ways for the next sixty years. But around the 1960s, a new concept of department store came about. This was the idea of discount retail. In 1962, Wal-Mart opened its first store, and Target, a division of the Dayton Company, opened their first discount store soon after. Their stores varied greatly, and even though they fall under the same “type” of store, their differences couldn’t be greater. Target designed their stores to give people “fashion and style at a better price” whereas Wal-Mart’s goal is to save people money (http://site.target.com). The differences continue from there. Organizational Profiles: Wal-Mart: Wal-Mart was founded by Sam Walton in 1962. They opened their first store in Rogers, Arkansas. From there, they expanded rapidly, opening stores quickly around the country. They now operate worldwide, under 14 different names, including the Sam’s Club chain, and Super Wal-Mart, Wal-Mart’s main type of store at this time. They continue to expand regularly and internationally, and currently employ 2.1 million people worldwide. When reviewing Wal-Mart’s corporate website, www.walmartstores.com, one can see that they still hold dear to the traditions started by Sam Walton over forty years ago. Many of the ideals that will soon be discussed are things or sayings that were done by Sam Walton when he started his first Wal-Mart store. Wal-Mart continues to apply the same principles in their stores around the world. Wal-Mart’s mission statement is “Saving people money so they can live better”. This goal is carried out in many ways in their stores and effectively describes their purpose. They mean multiple things when they make this statement. First of all, their goal is to simply save people money. They offer products at a low price and are always “working with [their] suppliers” to give their customers the “best deal out there” (www.walmartstores.com). They guarantee the lowest price in their stores too, and will match any local competitor’s price if asked within the store. This goal continues into the feature that Wal-Mart stores offer products specific to each community they’re in, making the savings most worthwhile to the local customer base. However, this is only half their goal. The second half of their mission statement is “so they can live better”. This is discussed further on their corporate website as they describe the savings that you get at Wal-Mart affecting other parts of your life. Their goal is for their customers to save money and therefore improve their lives, either through “saving for a house” or “helping a grandmother buy a special gift for her grandkids”. Shopping at Wal-Mart is to save money. Their main goal is not necessarily to have a family-oriented shopping experience, or to make their stores as pretty as possible so people like the environment better. Instead, their goal is to save money in the store so they can enjoy their lives outside the store. This is very different from Target’s mission, as will be later discussed. There are a couple other practices that Wal-Mart implements that come directly from Sam Walton, and continue to be seen in their stores today. These include things like the “10-Foot Rule” and “Servant Leadership”. The 10-Foot Rule is a customer-oriented goal that tells all employees to smile, make eye-contact, and say hello to any customer within ten feet of them. Their goal is to make customers feel welcomed and noticed, and remind them that “help is always available”. The concept of servant leadership is another “Sam-ism” as the website calls them, and states that all leaders or managers within the Wal-Mart Corporation, should always be right next to their employees, on the floor working side by side with them to help them improve and do their job better. This is taught to all managers and leaders within the company. Wal-Mart’s success comes from its widespread familiarity and its low prices. They are the leading discount retail store, and the place to go to save money nationwide and now around the world. People looking for a deal come to Wal-Mart, because they know they’re guaranteed the lowest price. But beyond that, their success comes from their streamlined stores that look and feel the same anywhere you go. Customers know they won’t be surprised when they enter a Wal-Mart, whether it’s in their hometown or across the country on vacation. This helps make Wal-Mart’s customers more comfortable and overall encourages their success. Because of their widespread existence, it seems that they will continue to succeed in their market, constantly beating out the competition with the best deals. Target: Target was founded right around the same time as Wal-Mart. The Dayton Dry Goods Company, which was founded in 1902, would eventually become the parent company of Target. Started in Roseville, Minnesota, the first Target store opened in 1962. It was called a “new idea in discount stores” (www.target.com) and attempted to separate itself from traditional discount stores and combine department store concepts with discount retail. It was marketed in 1962 as “a store you can be proud to shop in, a store that you can have confidence in, a store that is fun to shop and exciting to visit” (site.target.com). Within the year, it had four stores opened in Minnesota and continued its expansion from there. Target now has more than 1700 stores which are located in 49 different states. These stores include 240 Super-Targets, which features a full grocery section. These super-stores are new and continue to spread. Target is also attempting to grow its grocery section in over 100 stores within the next year. They are fully a national company and do not have any stores or interests worldwide. Target’s mission statement is “Expect more. Pay Less”. This, just like Wal-Mart’s statement, is two-fold. This goal is defined on their website as the following: to “make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience”. In order to support their mission, they are “guided by [their] commitments to great value, the community, diversity and the environment.” To begin, this idea of “expect more; pay less” is characterized by the idea that they want all their customers to experience great “design” and pay less for it. Target is more about keeping people fashionable and giving them the style they want and the quality they want for a lower price. This is related to the “great value” portion of how they say they fulfill their mission (http://site.target.com). They are also characterized by high commitments to their community. Target was one of the first companies in the country to designate a certain percentage of profit to donations each year. They also make regular donations to Goodwill and consider them a partner in their corporation. Along with that, they support diversity and view it as a “core value throughout every part of the company”. Finally, they are very high on incorporating environmentally-friendly practices into their company. This is a newer goal that and part of their mission, but they incorporate it regularly into their company, doing things like recycling old shopping carts. A big difference in Target’s mission and Wal-Mart’s is that Target’s goal is to make their guests’ shopping experience enjoyable, fun, and fashionable. They want their guests to get “great design at a lower price”. But beyond that, they want the shopping experience their guests have to be fun and exciting, to be more of an “event for the whole family”. Wal-Mart is not heavy on this. Their mission is to save people money and help improve their lives. Target’s mission is more geared toward the fun and life improvement occurring within the store and the shopping experience. This difference can be seen in the way Target designs their stores. They make their stores stylish and fun, and are heavy on the design of the store. Wal-Mart does not make this effort within their stores. They instead are more bulk-oriented in their design and do not emphasize the style of their stores. This difference, however, is what allows Target to attract a market that Wal-Mart has been unable to tap. Target reaches a more middle to upper class type of guest because of the style and fashion within the shopping experience and the products they sell. They attract a completely different type of guest, who wants to save money but also cares about fashion and style, just on a budget. This allows Target to hold a unique position in their market, and with their constant expansion into grocery and just with more stores, they continue to be a rival competitor for Wal-Mart and are able to offer their guests a very different experience. Results: While many people associate Wal-Mart with low-income, rural communities we wanted to see it for ourselves. The visit to Wal-Mart was during the middle of the week and in the early afternoon. Even though the visit was on a weekday, the hectic experience started as soon as entering through the parking lot. Crowded, and chaotic, with shopping carts scattered throughout, it took over six minutes to finally park in a space. Even walking to the building was an unpleasant experience. There were multiple large-numbered families with parents yelling at their children or children screaming and crying. There was also a man silting in his parked car calling out to me , “Hey girl, do you have a man' Where’s your man' I’ll be your man!!” While I was walking into the store, a worker, unattractively chewing gum with her mouth open, unenthusiastically said, with no eye contact “Welcome to Wal-Mart.” In my head I sarcastically was thinking, “Thanks.” The first shopping basket I grabbed to begin my shopping had an old newspaper in it. I discarded the first basket only to find a half eaten candy bar in the other. The store itself wasn’t as unorganized as I first expected, although the over all “look” of the store was not pleasant. The store reminded me of a huge warehouse with unflattering bright lights, and narrow aisles that were overcrowded with cheap products. The store was hard to maneuver in, due to its ignorant customers, unsupervised children running around, and product stands in the small aisles. I would have asked an employee where to find a specific item I was looking for, but I did not see one. Once I was ready to purchase my items, I went to the checkout lanes. Out of about twenty, only five were open. I waited almost fifteen minutes in line to by a pack of gum and some laundry detergent. Did I mention that I was also in the express lane (for customers with fifteen items or less)' The only positive part of the experience was the cashoutwoman. She wasn’t practically nice, but at least she smiled at me. As I made my way out of the store, I was mentally preparing myself to be patient while exiting the parking lot. It was worse then entering, it took another nine minutes to exit. Overall, it took almost forty minutes total to purchase two items. The communication between employees and the communication between Wal-Marts employees and its shoppers was not positive. Due to the large amount of shoppers, the employees weren’t interacting with each other. There was a woman dressed like the other employees (the uniform seems to be a blue vest), who walked around for a minute observing the cashiers. She was assumed to be a manger. The employees looked miserable, annoyed, and just didn’t seem to like their job. They did not interact with shoppers unless the shopper had a question about the price of an item on the receipt. The majority of actual shoppers of Wal-Mart were horrendous. I can’t even count the number of the shopper’s children crying, running around unsupervised, or being yelled at; there were just too many. One woman was even swearing and yelling at her five year old loud enough for everyone around her to hear. There was another couple with two kids arguing about money and food stamps. Funny that they were concerned about money, however, they were buying three video games. Not only did some of the children in Wal-Mart looked like they needed a bath, but their parents looked like they haven’t bathed in days either. At first one can attribute the location this particular Wal-Mart to the behavior and appearance of its shoppers; however, the Wal-Mart observed was in a middle class neighborhood in Milwaukee. Overall, I left Wal-Mart feeling annoyed-annoyed at the employees, annoyed at the shoppers and annoyed the quality of the store. “Saving people money so they can live better,” is a mission statement that bares some sort of truth to Wal-Mart. Wal-Mart does provide many items that are cheaply priced,however, weather people live better due to the inexpensive items can be questioned. Leaving the store, I did not feel that the eleven cents I saved on my purchases (compared to Target) was worth shopping there. It certainly did not make me live better. I’ll spend the extra money to shop anywhere else. Overview: The visit to Target was also the same day only two miles away from the Wal-Mart observed earlier. I entered the parking lot, parked, and entered the store in five minutes. The shopping carts were immediately to my right, and were easy to access. I went to find the exact items that were bought at Wal-Mart just an hour earlier, but I became distracted. The clothes department caught my eye. After spotting an attractive jacket that I put in my cart, I was on my way to buy the other items. The aisles were wide and shelved nice products. The store was quiet, easy to maneuver in, and the products were easy to find. I saw a total of six different employees on the sales floor. Their accessibility would have been extremely helpful if I needed help to find an item. When I went to purchase my items, there were only two checkout lanes open. The line I stood in had four shoppers ahead of me, however the cashier and other shoppers were efficient and I was exiting the store faster than expected. The cashier was also pleasant, asking how I was and commenting about the weather. Minus the time spent on looking in the clothes department, it took under twenty minutes shopping at Target. The communication between employees and the communication between Target’s employees and its shoppers was positive. Although I was not greeted walking into Target, I would have rather been not greeted at all by the unhappy employee at Wal-Mart. A man assumed to be a manger was at one of the check-out lanes preparing money in one of the registers. The majority of the cashiers were between 18-30 years old, and 55-65 years old. They seemed happy to be working. Overview: -wide aisles Based upon appearance and verbal and non verbal communication skills we were able to put Wal-Mart and Target shoppers under certain income brackets. It is understandable that during this time of economic hardship, people and especially families are doing whatever they can to save money. Wal-Mart is a store that definitely appeals to families and those who only have the money to spend on the bare minimum. This would explain the numerous amounts of families and middle to lower income people that were observed shopping at Wal-Mart. Although Wal-Mart sales exceed Targets (David, 2004), Target has the upper hand in terms of a wealthier consumer base. We attributed this to the positive shopping experience at Target. “Target tends to have more upscale customers who don’t feel the effects of gasoline prices and other economic factors as much as Wal-Mart’s core customers might. Moreover, Target is appealing to younger shoppers though snazzy advertising and partnerships with high end designers.” We couldn’t agree more. While Wal-Mart trumped Targets sales ($406 billion in revenues vs. Target’s $65 billion), Target was winning in terms of growth before 2008. Wal-Mart’s advantage during a recession is its low prices; however, for investors and executives, an important thing to ponder about is what will happen as the economy strengthens. Bernie Mcginn, chief investment officer at Mcginn, Mckean, & O’Neil shares, “People were shopping at Wal-Mart because it was the cheap place to shop. If you’re feeling less pinched, you go out to Target. You know you’re going to get a good value and you’re going to walk away with something a little classier than at Wal-Mart’ (Steverman, 2009). During this time of economic hardships, Target is trying two ways to win back shoppers. Through its “low price promise,” Target promises to now match the advertised price on any product offered by a competitor in the same market. However, Target executives, “don’t really want to stray too far into deep discount territory,” says Morningstar analyst Kimberly Piccicola(Gregory, 2009). The other strategy is to remind shoppers of its low prices while continuing to carry name brand designers such as Anna Sui and Carlos Falchi. Comparison: Attractiveness -Wal-Mart is not that attractive of a store, which includes but is not limited to: the dirtiness and un-organization of the establishment, the huge, white generic letters on the building, the feeling as if you were in a warehouse, and the attractiveness of the shoppers and of the uniforms of the employees. -Target’s buildings have a bit more “finesse.” Target’s color scheme, which includes red, excites people and gets energy going. The bright décor and simple logo is visually appealing, as well as the cleanliness of the store. Target also seemed more organized than Wal-Mart. Prices -It is widely known that Wal-Mart is known for having better or “cheap” prices compared with other store if its nature. They have recently tired to improve this image to appeal to potential costumers through improvements in their stores including renovations and improved layouts. Their “Rollback” specials are very appealing to people as well as exceptional. A shopper can find good buys for little money. 3) Customer Service -Although is may depend which store you visit to determine whose customer service excels, our personal experience determines that Target beats Wal-Mart. There are many friendly staff members throughout Target stores, frequently asking shoppers if they need help. -Wal-Mart employees seem unhappy and unhelpful, although this could be due to the overcrowded stores. -Finding a short check out line in Wal-Mart is rarely possible. -Target seems to make their shopping experience more user-friendly. 4) Supermarkets -Wal-Mart Superstores (although disorganized and messy) have a good selection of deli items and other food items at a great price. The selection is about just as good as any other grocery store, and still cheaper than Target. -Target has gourmet off-brand foods, such as Anchor Farms that have flavored waters such as blueberry or cracked black pepper and sea salt chips. If you want fancier, shop at Target. If you want value, shop at Wal-Mart. 5) Household Products -Both offer household products; however Target has a greater variety (including real art which Wal-Mart doesn’t have) and products that are more visually appealing. -Through personal experiences and friends/families experiences, Wal-Marts items did not stand up against the test of time. -Target carries clothing items that well known, trendy designers make especially for the company, such as Isaac Mizrahi. 6) Community -In comparison, Wal-Mart, with revenue of $288 billion in 2005, donated $200 million to charities and organizations in 2005, according to its website. 7) Customer Base Wal-Mart, founded in 1962 was based on a simple business proposition: low prices for the masses. The idea brought company to sales of $406 billion last year. -Target, also opened in 1962, but to compete against the fast-growing Wal-Mart, however, price wasn't enough. So Target went after customers Wal-Mart ignored the middle and even the upper class. And to get them to walk in the door, it gave them something Wal-Mart didn't have: style. 8) Sales -In January, all the big retailers, Target included, reported that sales declined since January 2008 – that is, all except for Wal-Mart: It posted a 2.1 percent gain (Doston, 2007). $405.6 billion dollars in retail sales for Wal-mart versus Target’s 64.9 billion as of May 2009 (Doston, 2007). -Wal-mart is world wide, Target is not. References Edelson, Sharon. (2009, January). Wal-Mart Performance Outpaces Gregory, Sean. (2009, March). Wal-Mart vs. Target: No Contest in the www.walmartstores.com http://site.target.com