Walmart’s Latest Move Should Worry Target

In the last couple of decades Target  (TGT) - Get Free Report has made itself a premier shopping experience when compared to competitors like Walmart  (WMT) - Get Free Report, Kohl's  (KSS) - Get Free Report and other department stores. But with Walmart’s latest move, it might be giving Target a run for its money to hold onto that title.

Target works with different designers to bring in new and unique fashions in apparel and home goods, and with the regular rotation of design collections. This way there is routinely something new to check out at the store.

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Kohl’s has been working to pick up its game in the market by building a community of shoppers who want to know who and where the apparel and home goods are coming from with a sense of shopping for the greater good. It has added more inclusive fashion to appeal to underserved shoppers.

Walmart built its brand around discounted merchandise and being a one stop shop for just about everything. Walmart and Target both compete with Amazon  (AMZN) - Get Free Report being able to offer faster delivery and order pick-ups, but Amazon has been increasing its ability to do the same.

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Walmart Reaches for New Target

The discount retailer has been known for decades for its ultra-low prices and now Walmart is making a change. Don’t get the wrong idea, customers will still be able to shop for the discounted merch they have grown accustomed to at the retailer. Walmart will begin offering some higher-end pieces, that you just wouldn’t expect to see next to the $4 t-shirts and shorts.

Walmart is developing the “Stores of the Future” by renovating 700 stores, according to Reuters. The remodel will cost roughly $17 billion, and will allow for new displays that are more modern than the racks around Walmart everyone is used to seeing.

To spice things up, Walmart is partnering with celebrities that speak to new audiences like Drew Barrymore and Sofia Vergara, two very different stars with very different styles. Walmart shoppers will be able to pick up a 5-pound bag of sugar, a lawn chair, and now some more fashion forward apparel and trendy home goods.

“They appreciate the fact that we’re still true to who we are as Walmart,” said Alvis Washington, Walmart’s vice president of marketing, store design, innovation and experience. “Great prices. But then also we now have these new brands that we’re actually showcasing in inspirational ways.”

Walmart has already transformed several of its stores in New Jersey, New York, Pennsylvania and Illinois earlier this year, with more on the way according to CNBC. These new stores have a chic feel to them, a look that is way more 'Target' than 'Walmart'.

When thinking about how Walmart hits with regular consumers, “They were kind of a one-trick pony,” said CEO of R5 Capital Scott Mushkin, who is also a retail analyst. “They were always about price and what they’re now doing is, yes, they still lead on price. But they’re starting to accelerate the dynamics in stores that matter to other people, along with value.”

Walmart Builds On Adding Brands and Selections

While Walmart is and will likely continue to be the leading discount store retailer, it's working to bring its more fashionable side to the table.

Maternity customers got more options when Walmart added Destination Maternity to give those customers a more comfortable and trendy option during those months and years during motherhood -- building its name in the fashion apparel for women who are looking for ways to spend less, but still feel like themselves while they are uncomfortable.

Walmart is taking a risk by expanding its fashion lines, albeit a small risk, but research has shown that while customers shop Walmart for price, 80% of those customers will spend more money at other retailers, says Denise Incandela, Walmart’s executive vice president of apparel and private brands. 

With less at risk, Walmart is expanding into more home goods which fills the gap created by the bankruptcy of Bed Bath and Beyond, which is closing all of its stores and liquidating all inventory. Those customers will now be able to find similar home goods at Walmart.