Target finds way to beat Wal-Mart: online

By Published on .

Wal-Mart stores might dwarf Target in overalls sales by a multiple of six, but by almost any measure the bull's-eye is giving the smiley face a sound beating online.

Consider the statistics going into the key holiday season. Target's audience grew 83% to 11.4 million in September 2005, compared with the same month last year, while Wal-Mart's grew 4% to 15.7 million for the same period, according to research firm comScore Media Metrix. The average ticket price of a shopper is $151 vs. $59 at, reports online research firm eMarketer. And according to research firm Internet Retailer, Target logged 25% growth in online sales to $756 million in 2004, compared with 8% growth to $782 million in 2004 for Overall, online retailing jumped 25% for full-year 2004.

"When it comes to online sales, Wal-Mart is a real laggard," said Kurt Peters, editor of Internet Retailer, which publishes an annual list of the top 400 e-retailing sites. Since neither retailer releases online sales data, a lag in measuring growth stifles real-time analysis.

Raul Vazquez, VP-marketing for, disputes the figures and says the industry data available fails to recognize the growth in sales the division is seeing. Internal forecasts show visits to will top 500 million in 2005, a 40% increase over 2004, and sales will grow at two to three times sales in 2004, although he would not release any data. "Our numbers right now are fantastic," he said.

But analysts expect Target's massive investments online this year, including a doubling of SKUs from 70,000 to more than 200,000, to make a dramatic difference.

From online trunk shows with Michael Graves to lifestyle Web sites around its stable of high-fashion designers, such as Issac Mizrahi and Liz Lange, Target views its online presence as a way to "extend the experience," said Will Seitliff, director of interactive marketing at Target.

Target's challenge

The Target strategy presents its challenges, though, said Bill Betcher of Gomez, a research firm that tracks performance of online sites, including how long it takes a site to complete a transaction, or the "success rate."

As Target added more stock this rate declined. In May, Target averaged just 15 seconds for transaction completion, but by October the rate was tracking at 21 seconds. Even though 21 seconds is the average for all online retailers, Target's exploding online audience may end up a mixed blessing this holiday season, Mr. Betcher said.

Jeffrey Grau, senior analyst of retail e-commerce at research firm eMarketer, argues that the better measure of success online isn't sales, but audience. "[Target] is marketing their Web site to drive traffic into their stores more than anything," he said. "When you consider success, you have to look at the influence of the online channel not just on online sales, but on bricks-and-mortar sales."

Most Popular
In this article: