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Hello Goodbuy, Bullseye!
March 26, 2008
Target’s marketing throw-weight is mighty, mighty. Especially as compared to its big-bruiser, mass merchandising rival, Wal-Mart.
Target spent $1.16 billion on advertising last year.*
Wal-Mart spent $1.07 billion.*
Target retail sales last year: $63 billion.
Wal-Mart: $240 billion (not including Sam’s Club or International).
TGT ad budget:
1.8% of sales.
WMT ad budget:
0.4% of sales.
On advertising, Target spends between four and five times the proportion spent by WMT.
There seems to be a payoff: as a discounter, Target boasts a gross margin that many of today’s department store retailers would envy: 31.8% of sales. Wal-Mart’s is 23.5%.
Even more revealing is the gap between gross margin and SG&A (each expressed as a percentage of sales). The spread at Target is a robust 9.5 percentage points. The Big-W spread: 4.7 percentage points.
Oh, and the bottom line: net earnings per diluted share. Target: $3.33; Wal-Mart: $3.13.
It seems to me that the Bullseye generates better vibe than the Smiley.
* (Figures from AdvertisingAge 2007 Marketer Profiles Yearbook: http://adage.com/images/random/lna2007.pdf)
Posted by James Mammarella on March 26, 2008 | Comments (0)
