Target Chief Executive Officer Brian Cornell has gotten more aggressive with holiday discounts during his second year of a turnaround effort, a strategy that is undercutting some rivals on price while also bringing headaches.
The company offered a 15 per cent discount on almost all its products online Monday, a more widespread deal than in past years. It also lowered prices on many apparel and toy products by 30 per cent, shifting away from the buy-one-get-one-discounted approach it used in 2014. The promotions were so popular that Target drew twice the traffic of its previous record-setting day, forcing the retailer to throttle back access to its website.
Target also has offered some of the industry’s lowest prices on toys, a key category during the holidays. Its toy prices were 1.3 percent below those of Walmart during Black Friday and 5.2 per cent cheaper than Amazon.com, according to an online survey by Bloomberg Intelligence. Target also undercut Toys “R” Us and Sears Holdings Corp.’s Kmart chain, the survey found.
While those types of discounts squeeze profit margins, they could help Target improve its reputation and lure away customers from rivals, said Mariam Sherzad, an analyst at Bloomberg Intelligence.
“For a long time, Walmart was associated with having the lowest prices,” Sherzad said. “If Target is able to brand itself as being well-priced, it could steal some Walmart customers. It could also help make online sales a bigger piece of the pie. And last, it’s a fight to defend its customers from Amazon.”
Walmart and Amazon remain formidable on price, though, and the companies question whether the toy survey accurately reflects their discounts. Walmart said that the limited subset of products measured - the study compared 37 identical toys sold at Target and Walmart - didn’t show its full range of pricing.
“When we look at our assortment on Walmart.com across the board, we know we meet or beat our online competitors’ prices four out of five times,” said Bao Nguyen, a spokesman for the company. “This is thanks to the smart pricing tools our technology teams have developed.”
Amazon, meanwhile, said the pricing survey didn’t measure its Lightning Deals - discounts offered over a short period of time - so the study didn’t give a fair picture.
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