Rising investment: Employees at work at a Walmart facility. The firm has boosted its online advertising outlays by 30%, with a 200% increase in spending on TikTok. — The Seattle Times
NEW YORK: In the most competitive holiday season in years, major US retailers Target and Walmart are spending more on ads to reach shoppers on short-video app TikTok and streaming platforms.
But while recent US credit and debit-card data point to a small gain for Target, with its shoppers spending slightly more in early December than a year ago, there’s little that the Minneapolis-based chain can do this year to reverse the trends that have put it at a disadvantage, investors told Reuters.
With more than 1,950 stores across the United States, and an array of mostly non-essential merchandise, Target has lost market share following waning sales.
Target’s shares have fallen 7% this year, compared to Walmart’s 72% gain.
“Target’s funk has been in place for a couple of years now and doesn’t have a quick fix,” said Sizemore Capital Management chief investment officer Charles Sizemore, which owns US$220,000 in Target shares.
“Would a late surge in advertising encourage shoppers to spend their gift cards at Target before year end? Maybe,” Sizemore said.
“I wouldn’t necessarily bet on that.”
Many retailers have kept a tight lid on spending as shoppers cut back on non-essential purchases.
DA Davidson analysts expect Target’s net advertising spending to rise only 0.11% overall in 2024.
“The fourth quarter is our biggest sales season of the year, and our marketing spend reflects that,” a Target spokesperson said, declining further comment.
From October through mid-December, Target spent 8% more on online advertising, compared to the same period a year earlier, including 70% more on TikTok to reach younger spenders, according to data from market intelligence firm Sensor Tower, which tracks online ad spending.
But Walmart boosted its online advertising outlays by 30% during the same period, with a 200% increase in spending on TikTok.
Target’s modest bump in advertising started in October when it began pitching its Circle Week deals, a week later than last year, Kara Lee, brand and digital advertising analyst at Sensor Tower, said.
In late November, Target forecast holiday-quarter comparable sales and profit below estimates as value-conscious consumers shopped for low-priced essentials at rival retailers including Walmart.
Target’s subsequent sales on Black Friday and Cyber Monday weren’t particularly strong, according to third-party data measuring credit and debit-card spending trends.
In the two weeks after Cyber Weekend, the shopping period from Thanksgiving through Cyber Monday, however, Target stepped up its digital advertising, spending 12% more compared to the two weeks leading up to Thanksgiving, and bought more spots on streaming platforms like Peacock and Hulu, Sensor Tower data show.
Target’s last-minute marketing push draws attention to its bargains, urging shoppers to “Hurry! Before last-minute deals are over,” as one Target ad puts it.
The retailer offered up to 50% discounts on toys and video games and up to 40% off kitchen appliances.
Walmart, which operates 4,615 US stores, focused its digital ad spending earlier in the season to tout its Walmart+ membership programme as a way to tempt shoppers hunting for Black Friday deals.
Yet shoppers only modestly boosted their spending at Target in early December, according to credit and debit-card data from two separate research firms.
And in the week following Cyber Monday week, visits were down 6.8%, according to foot traffic data from Placer.ai.
From Black Friday on Nov 29 to Dec 11, for instance, Target shoppers spent 5.5% more compared to the same 13-day period last year, according to Earnest Analytics, which tracks final amounts on credit and debit-card receipts without adjusting for inflation.
A separate data firm, Facteus, said Target shoppers spent just 2.2% more during the period compared to a year earlier.
Facteus said it captures between 7% and 10% of United States spending on credit and debit cards.
The investors said Target has a longer-term goal, one that will require it to shift its strategy over several quarters.
Given the price-sensitivity of many Americans, Target still needs to lower its prices to better compete with Walmart and Costco, Bernstein analysts said last week. — Reuters
