Target Battles Walmart for Low-Price Supremacy

  • Share
  • Read Later
Victor J. Blue / Bloomberg via Getty Images

Target gets bragging rights in the most recent study comparing prices between the “Expect more. Pay less.” retailer and its “Save money. Live better.” competitor, Walmart. In the study, matching up costs of 150 similar items in similar locations, Target came out as the overall cheaper option. Guess how much you’d save by shopping at Target?

A whopping 46¢ for every $100 spent. As reported by Bloomberg Businessweek, research from Bloomberg Industries indicates that “prices at Target were 0.46 percentage point cheaper than Walmart this month. That means for every $100, Target was 46 cents less expensive.”

The slim pricing victory by Target is news because Walmart tends to dominate the battle to the bottom with its Everyday Low Prices and price-matching guarantees. As recently as July, Walmart prices were found to be 2 percentage points lower than Target. Before the new study figures were released, the last time Target trumped Walmart in this pricing competition was October of 2011.

(MORE: Terrible Financial Advice: Top 10 Money Tips You Shouldn’t Follow)

What appears to have put Target ahead, at least for the time being, is a blitz of seasonal and back-to-school discounts and promotions. Natalie Berg, a Planet Retail analyst, explained to Businessweek:

“When it comes to seasonal, nobody does it better than Target. This year, they’ve gone in all guns blazing, getting more aggressive on price and creating a far more compelling in-store environment than Wal-Mart.”

Does Target really have the best back-to-school prices then? That’s debatable. In a recent back-to-school shopping survey from Stella Service, which compared online vs. brick-and-mortar retail, old-fashioned shopping in physical stores was deemed as the cheaper, if not necessarily more convenient, option. The cost of 13 back-to-school essentials averaged $31 in brick-and-mortar locations of chains such as Walmart, Target, Staples, and Office Depot, compared to an average of $53 to complete the same order online. And the least expensive place of all to shop wasn’t Target or Walmart but Office Depot, where completing the shopping list cost $24.97.

(MORE: 10 Things You Should Be Buying Used)

A similar back-to-school price comparison exercise from yielded different results, with Walmart and Target neck and neck for the least expensive school essentials, and both beating the prices of Staples, Office Max, and Kmart.

The mixed findings of surveys like this clue shoppers in to something they probably already know: No single retailer has the cheapest prices all the time, for all items. You’ve got to shop around, and by doing so, you’re giving stores more reason to stay on their toes and keep up with the competition in terms of low prices.

The big retailers know this is how modern-day consumer shop, especially for things like electronics, so the competition is fierce. Walmart, for instance, recently dropped the price of the Apple iPhone 4S to $148, from $188, and Target isn’t far behind, selling the same iPhone for $150 (both require a two-year contract with a wireless provider).

(MORE: What’s in Store: Can Mobile Browsing Help Save Brick-and-Mortar Retail?)

While shoppers benefit from retail competition through cheaper and cheaper retail prices, there’s a possibility to save even more by learning how to snag goods well below retail. A recent post at Yahoo! detailed a wide range of strategies and insider tips relating how and when Target puts items on clearance. One anonymous former employee of the store, for example, said that the biggest discounts are available on flukey items that were purchased online and returned to the store. “Most of the time they go straight to 90 percent off because there is no place for them on the planogram,” the former employee wrote in the online forum Reddit. (Would have also been nice if he or she explained what the heck a “planogram” is. It’s basically a model or diagram of the store, detailing which items go in which aisles and shelves.)

Also interesting is what’s known in retail circles as the “3-3-2 rule,” a discounting scheme for holiday merchandise that extends well beyond Target. Here’s how it works:

The first three days after the holiday, items are 50 percent off. For the next three days, they’re 75 percent off. For two days after that, they’re 90 percent off and, after that, whatever is left goes to Goodwill.

Brad Tuttle is a reporter at TIME. Find him on Twitter at @bradrtuttle. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.