Holiday Cheer: Retail Stocks in the Spotlight

As the holiday season approaches, retailers are gearing up for their busiest time of the year. But not all retailers are feeling the cheer. While Walmart has been basking in the glow of a 72% gain in its stock price this year, Target has been struggling, with its shares falling 7%. Let's take a closer look at what's been happening in the retail sector and how Target can turn its fortunes around.

Target's pricing strategy has been a significant factor in its underperformance compared to Walmart. Despite having a strong brand presence, Target has lost market share due to waning sales and a decline in shopper visits. Investors have noted that Target's funk has been in place for a couple of years and doesn't have a quick fix. To better compete with Walmart and Costco, Target needs to lower its prices and win back its core customers, the moms.

Changes in consumer spending habits have also played a role in Target's recent performance. Shoppers have been favoring discount retailers like Walmart and dollar stores over Target's broader product range. Despite Target's advertising push, including a 12% increase in digital advertising post-Cyber Monday, shoppers only modestly boosted spending in early December, with visits down 6.8%. Target's shares have fallen 7% this year, compared to Walmart's 72% gain, highlighting the need for Target to lower prices and better compete with Walmart and Costco.

Target's holiday advertising strategy has evolved to focus on digital platforms and reaching younger shoppers. In 2024, Target spent 8% more on online advertising and 70% more on TikTok compared to the same period in 2023. This shift reflects the company's effort to adapt to the changing consumer behavior and preferences, particularly among younger generations. Additionally, Target has been offering more discounts and promotions, such as up to 50% off on toys and video games, to attract price-sensitive shoppers. However, despite these efforts, Target's sales growth has been modest, with shoppers spending only slightly more in early December compared to last year.



Target's digital advertising strategy, particularly on platforms like TikTok and streaming services, has played a significant role in driving foot traffic and sales during the holiday season. According to Sensor Tower data, Target increased its online advertising spend by 8% from October to mid-December, with a 70% increase on TikTok. This targeted approach helped Target reach younger spenders and boost its digital presence. However, despite this effort, Target's sales on Black Friday and Cyber Monday were not particularly strong, and foot traffic in the week following Cyber Monday was down 6.8%. This suggests that while digital advertising can drive some traffic, it may not be enough to reverse Target's overall sales trends.

Target's holiday sales promotions, such as Circle Week deals and last-minute discounts, have had a modest impact on consumer spending behavior and market share. While Target increased its online advertising spend by 8% from October to mid-December, Walmart outpaced it with a 30% increase. Target's Circle Week deals started a week later than last year, and its last-minute marketing push focused on bargains like up to 50% off on toys and video games. However, Target shoppers only modestly boosted their spending in early December, with a 5.5% increase compared to the same period last year, according to Earnest Analytics. Despite Target's efforts, Walmart's earlier focus on its Walmart+ membership program and lower prices have helped it maintain a stronger market position.



In conclusion, Target's holiday advertising push has had limited success in driving sales and foot traffic. While Target has made efforts to adapt to changing consumer behavior and preferences, its pricing strategy and promotional tactics have not been enough to compete with Walmart's aggressive advertising strategy and lower prices. To turn its fortunes around, Target must focus on lowering prices and winning back its core customers, the moms. By doing so, Target can better compete with Walmart and Costco and regain its market share in the retail sector.