) is one of the largest retailers in the U.S. competing with the
world's largest retailer Wal-Mart (
). Although there is an enormous gap between the revenues of the
two retailers, though they are not all that different from each
other. They operate similar format stores, have comparable product
offerings and pricing. They even have some similar strategies and
cater to a similar customer base in the U.S.
So, where is the difference? We'll say it's the difference in
While both companies started 50 years back in 1962, Wal-Mart has
expanded vigorously in the U.S. and international markets. Wal-Mart
is now at the level of self-cannibalization in the U.S. and Target
is far from it in our view. Moreover, Wal-Mart is well established
in international markets and Target still has little to no presence
so far. Due to its sheer size, Wal-Mart can be considered as a
reference for the retailers in terms of market presence, and that
is why we believe that Target has immense potential to expand.
See our complete analysis for Target
What Makes The Two Retailers Similar?
Target and Wal-Mart operate similar format stores in the U.S.
Wal-Mart has discount stores, Supercenters and neighborhood markets
while Target has similar format general merchandise stores,
Supertarget stores and expanded food assortment stores. Moreover,
they operate on the similar strategies of
Every Day Low Price
Expect More Pay Less
Most of the retailers' product offerings fall under a similar
categories such as grocery, hardlines and apparel. The both compete
for customers seeking value, selection and convenience. They are
also planning to penetrate the urban markets with their smaller
format Wal-Mart Express and CityTarget stores. These trends suggest
that the two retailers are on the same page in terms of market
approach. However, Wal-Mart is way ahead of Target with almost six
times its revenues.
Where Is Target And Where Can It Go?
Both the retailers started way back in 1962. Since then, Target
expanded in the U.S. and currently has about 1,760 stores across 49
states in the U.S. On the other hand, Wal-Mart has around 4,000
stores in the U.S. and 6,000 globally in 27 different countries. In
the U.S., Wal-Mart is almost at the level of saturation in terms of
presence, but still has scope of expansion in the international
markets. If we consider Wal-Mart as a reference for the potential
market size, the immense potential for Target's expansion is
Wal-Mart started its international expansion in 1991 with Mexico
and entered Canada in 1995.
Target will open its first stores in Canada in 2013. Target is
missing out on the growth opportunities in developing economies
such as Brazil, Mexico and China. We believe that it will take
Target a significant amount of time to establish itself in these
regions, but the retail environment might not be equally lucrative
The big growth opportunities are right at Target's door steps.
The question that remains is, how will it respond.
Our price estimate for Target stands at $60
, roughly inline with the market price.
How a Company's Products Impact its Stock Price at