Wal-Mart Stores (NYSE:WMT) is highly focused on winning in price versus its competitors. In other words, it wants to offer lower prices than a competitor like Target (NYSE:TGT) in order to drive foot traffic and sales. Wal-Mart has been effective in its quest, but Target has an edge in one area, and it's an area that has the potential to grow. Price differentialLast June, prior to Target's data breach, Kantar Retail found that Target was 2% more expensive than Wal-Mart. Therefore, Target customers should have planned to "Expect More, Pay More." Of course, Target's prices are still more affordable than what you will find at most retailers. Therefore, a lot depends on whether or not you are willing to pay a slight premium for a more comfortable shopping experience. This is understandable, and that cleaner and more comfortable atmosphere (wider isles included) gives Target at least one edge ... but that's not the edge being referred to above. In January, Kantar Retail ran another study comparing the price differences between Wal-Mart and Target.
The study was based on a basket full of the same stock keeping units (SKUs). The total basket prices were as follows: That's a 3.8% pricing "advantage" for Wal-Mart. The word "advantage" is in quotations because lower pricing isn't an advantage for all retailers. That's only so in this case because of the business models -- attempting to attract value-conscious consumers. Wal-Mart and Target rely on volume. Wal-Mart's lower prices led to a 17 basis point reduction in gross margin for the first quarter year over year, but Target's gross margin was also affected in the first quarter, from 29.5% versus 30.7% in the year-ago quarter. This was primarily due to promotions in order to drive traffic and sales. It's unknown how long it will take for Target to attract traffic and sales without its margins being hit, but that aforementioned edge is about to be revealed. Target's secret weaponRemember how Wal-Mart's total basket price was 3.8% lower than Target's? While this is obviously going to help Wal-Mart attract more on-the-fence consumers, Target's secret weapon is its REDcard.
For Target customers using the REDcard, Target is actually 1.4% cheaper than Wal-Mart. This is because Target REDcard members save 5% on most purchases. Plus, Target REDcard members visit the store more often and buy more items. That being the case, a big key to Target's future is whether or not it can increase its REDcard memberships. Fortunately, the answer is likely yes. In the first quarter, Target's REDcard penetration was 20.4%, up between 200 and 300 basis points year over year. Despite slower growth in recent REDcard penetration, this is likely a temporary slowdown due to the data breach. If you were seeing declines in memberships, then you should worry, but that's not the case. Target is also offering free online shipping for REDcard members, which has led to significant online penetration. Going forward, Target will focus more on marketing its REDcard. If it can continue to make the REDcard highly enticing by offering features like free online shipping, then the future is bright, but it might take a while.
The bottom lineTarget might not be expanding margins right now, but the REDcard offers an opportunity to steal market share and increase its e-commerce presence. If it can steal market share in the brick-and-mortar space, then it should be able to cut costs in order to improve margins. If it can increase its online and mobile presence, then this should also help margins since overhead is lower than in the brick-and-mortar space. As far as the pricing war goes, it's not as obvious as most people think. Wal-Mart has the edge, but not when you include Target's REDcard. From an investment perspective, both retailers are likely to be long-term winners, but Wal-Mart is better situated presently. If you plan on investing in Target, then you need a great deal of patience. Target is still getting over its data breach (overall costs not yet known) and poor performance in Canada. For all you consumers out there, now you know how to save the most money.The Difference Between LEGO MINDSTORMS EV3 Home Edition (#31313) and LEGO MINDSTORMS Education EV3 (#45544)EV3 General, Featured, Product Guides
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Sign up then earn points when you complete…Theme Park Insider - Staff Columns - Entry Written by Robert Niles Published: May 22, 2004 at 5:25 PM RIDE REVIEW: Here's a novel concept: a theme park introducing new attractions for its anniversary.Okay, okay, I know Disneyland finally got around to announcing it will add a new ride, fireworks show and parade for its 50th anniversary next year. But Legoland California, down the road an hour in Carlsbad, is also celebrating a birthday, turning five this spring. And the park is trying to out-do its larger, older rival by debuting five new attractions for its anniversary.The latest of these, the Fun Town Fire Academy, opened this morning for a gathering of invited guests. Let's back up for a moment, first. Only two of Legoland's new attractions can be considered rides. Two others are walkthrough exhibits of Lego constructions and the fifth is a fake dinosaur dig in the dirt, where parents have to pony up $3 to rent a shovel and bucket.
But Legoland's never aspired to offer blockbuster attractions like the Disneylands of the world. This park aims to create fun, often interactive, play experiences for kids and occasionally their parents. And Legoland succeeds again with its newest attraction.The Fun Town Fire Academy defies conventional theme park categories. It's not a dark ride, a playground or a show. Perhaps my six-year-old daughter best categorized it when she declared, "it's like a challenge on 'Survivor'." Up to four people work together as a team to power a rather large fire engine down a track, where a "burning" building awaits. Four teams are competing to see which can get to the fire, put it out by soaking a target with water, then get back to the starting line first. To move the fire engines, at least two people must pump a handle, like an old rail car, while one person holds a joystick down in the direction the car is supposed to go. And when the team gets to the "fire" (a false-front building with painted flame targets in the window), two people must work another pump to crank out water, while the other two aim the streams at their target.
Then everyone rushes back into the engine to pump it back to the starting line. All the challenge lacked was Jeff Probst off to the side, barking "Survivors... go!"Here's a hint: do not be the only person over age six in your car, unless you really, really want to feel the burn. And I'm not talking about the fake fire. Moving these cars takes work. Kids really like getting exhausted. The littlest ones can "steer" the truck and aim the hoses while the bigger kids (or adults) do the pumping work. (Children must be at least 34 inches tall to participate.) And everyone gets to run around, piling out of and into the truck at the fire scene.Despite the best efforts of me, my daughter and three-year-old son, the Niles Tribe finished third in our initial challenge. (At least we didn't finish last!) And the kids begged to go again. Which, ultimately, marks any successful attraction.Now indulge me a momentary tangent. Why on Earth doesn't Viacom (owner of Paramount Parka and Survivor's CBS television network) take a lesson from Legoland and develop a *real* Survivor challenge into an attraction at one of its theme parks?
Universal showed with Men in Black: Alien Attack that an attraction built around an interactive competition creates a unique experience for each visitor on every visit, making people want to ride again and again and again. Survivor is one of the hottest entertainment properties in America now -- wouldn't a Survivor challenge attraction break the turnstiles at a Paramount park?Okay, back to Legoland. The park also unveiled today a new edition of its Big Test firefighters' show, featuring a bumbling troupe of recruits who discover how to work together to learn some fire safety rules, overcome their fears and make the most of a second chance to become certified Fun Town firefighters. It's a charming little show, filled with slapstick and tumbling. You could easily miss it, but won't regret sitting down for a performance, either.The Fun Town Fire Academy and the Big Test show will open to the public May 25.NOTES:Legoland has allayed my previous fears, and improved the area around its new Dino Island.
When I first reviewed the new Coastersaurus roller coaster and Dig Those Dinos play area last month, I complained about the lack of décor in this land. Now plants are growing throughout the land, and Legoland has installed a couple impressively colored dinos. Still, the coaster could use another dino or two along the track, but Dino Island's now a worthy addition to the park.The fifth new attraction at Legoland, A Florida-themed expansion of the Miniland walkthrough, will debut on Father's Day weekend in June. The other new attraction, the Lego Block of Fame, features Lego models of various pop culture icons and opened in February.Legoland's picked up Volvo as the sponsor of its Driving School and Junior Driving School attractions. As a result, the kids' cars now sport the Volvo stroke on their grilles. Legoland's also added several new sidewalk set scenes and figures throughout the Driving School. On the down side, the new instructional video is now shown on overhead monitors, instead of a large screen at the front of the queue.