NEW YORK — This holiday season, the biggest discount chains in the U.S. will tell the tale of two very different shoppers: those that have and those that have not.
Wal-Mart Stores Inc., the world’s largest retailer, on Thursday acknowledged that its low-income shoppers continue to struggle in the economy and issued an outlook for the fourth quarter that falls below Wall Street estimates. On the same day, its smaller rival Target Corp., which caters to more affluent shoppers, said it expects results during the quarter to exceed the Street’s projections.
The two discounters offer valuable insight into how Americans will spend in November and December, a period that’s traditionally the busiest shopping period of the year. Some merchants depend on the holiday shopping season for up to 40 percent of their annual sales, but economists watch the period closely to get a temperature reading on the overall mood of American consumers.
The forecasts seem to confirm a trend that has taken shape during the economic downturn. Well-heeled shoppers spend more freely as the economy begins to show new signs of life, while consumers in the lower-income brackets continue to hold tight to their purse strings even as the housing and stock markets rebound.
Wal-Mart and Target both are discounters, but they cater to different customers. Wal-Mart, which says its customers’ average household income ranges from $30,000 to $60,000, hammers its low-price message and focuses on stocking basics like tee shirts and underwear along with household goods. But Target, whose customers have a median household income of $64,000 a year, is known for carrying discounted designer clothes and home decor under the same roof as detergent and dishwashing liquid.
The difference between the two discounters is becoming more apparent during the holiday shopping season, as both discounters attempt to cater to lure different shoppers into stores.
Wal-Mart last week said it will offer deeper discounts and a broader assortment of merchandise. The company also started its holiday layaway program a month earlier than a year ago and lowered its fees for the program from $15 to $5.
Target, on the other hand, is trying to appeal to higher-end shoppers.
The retailer is teaming up with luxury merchant Neiman Marcus to offer a limited collection spanning from fashion to sporting goods. More than 50 products from 24 designers, including Oscar de la Renta and Diane von Furstenberg will be available at both stores and on their websites starting Dec. 1 until they sell out.
Target for the first time is matching prices that customers find on identical products at some online competitors this holiday season, including Walmart.com and Amazon.com. The price match program, which covers the period from Nov. 1 through Dec. 16, is an attempt to combat the “showrooming” trend in which shoppers use their smartphones while they’re in stores to browse for products at cheaper prices.
Target’s customers may be a little more resilient than Wal-Mart’s to the economy’s woes, but Target officials said that the retailer expects shoppers to remain cautious
“Our research with (customers) indicates they are continuing to shop with discipline, focusing on lists and budgets and occasionally splurging on more discretionary items,” said Target’s Tesija.