The slim tunics and velvet blazers on Wal-Mart's clothing racks this holiday season are more than the latest trendy fashions. They're a sign the...
The slim tunics and velvet blazers on Wal-Mart’s clothing racks this holiday season are more than the latest trendy fashions. They’re a sign the intense competition between the world’s largest retailer and its upscale discount rival is ratcheting higher.
There are other indications Target has put pressure on Wal-Mart. Hoping to get customers shopping earlier, Wal-Mart will open at 5 a.m. Friday, the official start of the holiday-shopping season. That’s an hour earlier than before.
Wal-Mart’s also promising to match competitors’ prices on specific merchandise that day.
“This is the most aggressive Wal-Mart I have seen in 10 years,” said C. Britt Beemer, chairman of America’s Research Group, based in Charleston, S.C. “Target is definitely going to have to be more promotional. It needs to respond.”
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Wal-Mart stumbled last year when its discounts weren’t enough to satisfy customers and its stores lacked must-have items including iPod music players.
So far this year, it looks like Wal-Mart has gained ground. It’s Target that’s been less generous with discounts, charging more on toys than Wal-Mart and Toys R Us, said Sean McGowan, an analyst at Harris Nesbitt. And Wal-Mart began promoting holiday merchandise a week earlier than Target.
Wal-Mart’s more aggressive marketing may already have stolen some business from Target, which warned that sales from stores open at least a year, known as same-store sales, are tracking well below its 4 to 6 percent growth forecast for November. Same-store sales are considered a strong indicator of a retailer’s health.
Wal-Mart has held to its November sales growth forecast of 3 to 5 percent.
“Overall, things are changing,” said Gail Lavielle, a Wal-Mart spokeswoman. “We have to be relevant to a broad range of customers. Price is important, but we are also concerned with value. Value is not just price. It is assortment and convenience.”
The early positive signs are a welcome turn for Wal-Mart, which has faced increasing criticism for how it treats its workers. But Target appears to be unfazed.
“We feel we will be absolutely competitive with Wal-Mart and the rest of our competitors,” said Lena Michaud, a Target spokeswoman. “Our marketing is just starting.”
Target, whose stores will open at 6 a.m. Friday, is reprising one of last year’s gimmicks, a wake-up call shoppers can arrange in advance. This year, the No. 2 discounter is adding tuck-in calls, which customers receive the night before.
Target’s early stumble is surprising since the retailer has enjoyed a 6.2 percent increase in same-store sales so far this fiscal year, surpassing Wal-Mart’s 3.6 percent.
Target, whose affordable but trendy fashions appeal to a higher-income shopper, has been less vulnerable than Wal-Mart to economic woes such as higher energy prices.
But Target faces tough competition from Wal-Mart on more than just price. Wal-Mart has sharpened its merchandise to try to reach style-conscious customers who go to Wal-Mart for food and basics but avoid the fashion and home-furnishings departments.
One attraction is Wal-Mart’s new brand called Metro 7, which offers such designs as low-priced velvet jackets and camisole tops. Shoppers will also see more luxurious linens and a broader array of consumer electronics that includes higher-end plasma TVs and digital cameras.
Wal-Mart is using its Web site, walmart.com, which sells exclusive, higher-priced products, to reach out to its more affluent shoppers.
Shoppers have noticed the changes.
“They’re getting better,” said Maribel Santiago, shopping at a Wal-Mart supercenter in Wallingford, Conn.
Still, many consumers look to Target for cool merchandise. While Wal-Mart has improved its women’s fashions and electronics, its home furnishings and men’s apparel still lack excitement, said Bob Buchanan, a retail analyst at St. Louis-based A.G. Edwards.
Analysts are also watching to see if the negative publicity about Wal-Mart could affect shoppers.
Wal-Mart has long been criticized for its employment policies, including pay and health-care coverage. Last month, an internal memo obtained by an anti-Wal-Mart group stirred controversy because it suggested ways to cut medical costs by discouraging unhealthy job applicants.
Wal-Mart hopes its new product mix and lower prices will overcome negative news.
“We hope if we take care of our customers by giving them the best value in the marketplace, they will continue to come to us as a primary destination,” said Lavielle. “We don’t think they will be disappointed.”
Associated Press reporters Shelley K. Wong in Hartford, Conn., and Natalie Gott in Raleigh, N.C., contributed to this report.
The sales outlook looks brighter for the holiday season, a retail trade group says.
The National Retail Federation, the world’s largest retail-trade organization, raised its growth forecast Tuesday for the Christmas season to 6 percent from its September forecast of 5 percent.
“When we had made the forecast, Katrina had just hit,” said Rosalind Wells, economist for the trade group But she said she has seen strong economic indicators since then.
Mass. tells Wal-Mart
to close on Thursday
Massachusetts Attorney General Tom Reilly said Wal-Mart must close its stores in the state on Thanksgiving.
In a letter to an attorney representing Wal-Mart, Reilly said he had received complaints the retailer planned to open stores on Thanksgiving.
“Thanksgiving is a legal holiday in Massachusetts, and general retailers, such as Wal-Mart, are not permitted to operate,” Reilly wrote.
Wal-Mart spokesman Marty Heires said the retailer’s Massachusetts stores will be closed Thanksgiving.