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 (1)

July 23, 2008

In response to: Hello Goodbuy, Bullseye!
Terri Maurer commented:

James: While Target's advertising budget may be greater than Walmart, the other factor to consider is their very different target markets (no pun intended). Walmart focuses on lower income customers and those just looking for a bargain. Target is much more design focused and serves a market with more disposable income and an eye for 'design at a discount'.