Comparing key characteristics of different companies from the same industry can provide significant insight into the nature of business and various strategies which companies from the same industry can utilize in their activities. Walmart and Target present an example that demonstrates how companies from the same industry use different strategies to benefit from healthy competition. This essay will analyze and compare the key characteristics of Walmart and Target and identify the main competitors for the selected companies.
Firstly, both Target and Walmart are specialized in retail and operate large chains of stores. Target currently has nearly two thousand stores in the U.S., while Walmart operates more than ten thousand stores (Mirzayev, 2019). Furthermore, both companies offer a large range of products for customers, from food to household goods. Target primarily focuses on consumer goods, such as electronics and apparel, while Walmart prioritizes sales of low-price items, such as household goods.
However, in direct comparison, the Walmart store chain is significantly larger than Target. Walmart is currently ranked first in revenue among the top 25 global retail companies, with the latest revenue of $572 billion in 2021 (GlobalData, 2022). On the other hand, Target’s position in the same rank in 2021 was closer to the bottom of the top ten with $106 billion in revenue (GlobalData, 2022). Furthermore, both companies’ performance was affected by supply chain difficulties sourced from the COVID-19 pandemic in the last three years, with Walmart reporting a 41.45% net income loss in 2019 (WSJ, 2022a). Similarly, Target reported an 18% net operating cash flow loss in 2022 (WSJ, 2022b). However, experts suggest that Walmart faces even higher risks in the conditions of inflation due to the company’s size (Stein, 2022). Thus, even though the companies significantly differ in ranking, they both provide the same services and operate under the influence of similar external conditions.
Next, considering the question of corporate governance, Walmart approaches the topic from a structural and staff-centered point of view. Thus, the company perceives the combination of diverse and experienced people in the company’s structure as the basis of corporate governance (Walmart, 2022). Target prioritizes ethics in corporate governance and perceives the Board of Directors and management as founders of the corporate governance practices. Thus, the corporate governance strategy in Target is documented in the company’s guidelines and code of ethics (Target, 2021). Walmart’s size and position allow the company to hire more qualified leaders and perceive their diversity and experience as the foundation of corporate governance. Furthermore, because Target is significantly smaller than Walmart, it is easier for the company to assign specific responsibilities to management and leaders.
Lastly, while Walmart and Target may be acknowledged as competitors in some commodity groups, they generally pay more attention to other competitors. For example, Target focuses on online sales while Walmart primarily focuses on retail, which removes Walmart from Target’s direct competitors. Commitment to online sales with free shipping, a loyalty program, and quality service contributed to the development of Target’s good reputation among customers. However, in terms of online sales, Target is competing with Amazon, which gained a good reputation among customers for fast delivery, a wide range of products, and loyalty programs, and offers lower prices than Target. On the other hand, Walmart mainly sells low-priced goods, which puts the company in direct competition with wholesale stores, such as Costco and dollar stores. Furthermore, while Walmart is consistently ranked first among retail stores, Costco’s value reputation is higher even though its target audience is significantly smaller. Thus, while both companies have acquired a good reputation among customers for quality services, their competitors have also developed good relationships with the customers.
In conclusion, the essay explored two different companies in one industry and analyzed how their features influence their corporate governance and competitiveness. While Walmart presents the largest retail store chain, its scale makes it more subjected to financial risks, and prioritizing sales of low-priced goods puts the company in direct competition with smaller retail companies. On the other hand, Target’s focus on online sales puts it in competition with a larger online retail platform.
References
GlobalData. (2022). Top 25 retailers by revenue in FY2021 revealed by GlobalData.
Mirzayev, E. (2019). Walmart vs. Target business model: What’s the difference? Investopedia.
Stein, S. (2022). Much anticipated quarterly reporting for Target, Walmart. Forbes.
Target. (2021). Corporate governance guidelines.
Walmart. (2022). Corporate governance.
WSJ. (2022a). Target Corp.
WSJ. (2022b). Walmart Inc.