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Target Hits Mark in Price War With Wal-Mart


The retail giant strides ahead for now, but will it be able to take the throne?

MINYANVILLE ORIGINAL Target (TGT) won the latest round in its price war with Wal-Mart (WMT) this month, as researchers find Target to be the cheaper discount chain, even if only by a few cents. According to Bloomberg, who has been following this topic for the past two years, Target's prices were lower than Wal-Mart's prices for the first time since October 2011, and this widened the price gap by the biggest margin since Bloomberg's study began.

The numbers came from comparing 150 items in stores five miles from each other in order to get a good sense of which retailer appealed most to consumers. Target's advantage was partially due to its recent reduction on food prices, which Bloomberg analysts believe may be tied to back-to-school promotions.

Target has become a strong food competitor in the last three years, adding grocery departments to more than 1,000 of its 1,722 stores, which has helped boost sales. Target is now preparing to take its fight with Wal-Mart to the international stage next year, and will include efforts to expand into Canada.

Despite the news, Wal-Mart is not impressed. Even if its rivals have lower prices, Wal-Mart still claims the title of price leader, according to spokeswoman Deisha Galberth Barnett:

"Anytime there's an environment with high-low retailers, pricing surveys will reflect some differences," Galberth Barnett said in an emailed statement. "Wal-Mart is delivering everyday low prices -- not pricing gimmicks -- every day, 365 days per year, not just during a single week or during a particular season. Our customers don't have to wait for a sale or look for an ad."

Still, analysts believe that Target's victory is a real blow to Wal-Mart's pride, considering how publicly the company has been rolling out its $.88 deals and ad-match campaigns.

Target surprised itself with its victory since the retail giant doesn't try to beat Wal-Mart on prices across the entire store, but rather on key categories. "Target is very focused on being priced on par with Wal-Mart, especially in things like consumables and cleaning products," Patrick McKeever, managing director with MKM Partners, said in a phone interview. "They try to be competitive with Wal-Mart on items that are the most visible."

Wal-Mart still has an advantage over Amazon (AMZN) for the moment; a similar study found Wal-Mart's items to be cheaper by an average of 20%. However, when compared by website prices, its advantage fell to 7%.

Both discount chain stores have been making impressive gains in the stock market this year, with Wal-Mart up 20.32%, following Target's rise of 24.17%. Right now, Target is smiling from its victory, but it's anybody's guess as to who the champion will be.
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