Dallas survey: Target units rate high on store design, promotions - Babson College Retailing Research Report

Discount Store News, August 2, 1993

As was shown in other markets, store count in Dallas/Fort Worth is not a determinant of market coverage. In this region, Kmart has 35 stores, Wal-Mart 30 and Target 15. But both Kmart and Wal-Mart have a lower share of primary shoppers in Dallas/Fort Worth compared to Atlanta. Here, Target has a stronger position and is more competitive overall.

The survey found that Kmart's shoppers are primarily location/convenience driven and to a lesser extent by sales promotions, price and assortment. Wal-Mart's shoppers are the most price driven, but are also looking for covenience and assortment. Target shoppers are looking for assortment and special sales and promotions.

Wal-Mart is still able to draw large numbers of consumers, noted Tigert. Overall, 64% of all respondents shop Wal-Mart either most or second most often. That figure is much higher than the market share for Target (45%) or Kmart (28%). However, Target has only half as many stores as Wal-Mart, while Kmart has more stores than Wal-Mart.

What draws shoppers to Wal-Mart remains unchanged from market to market, according to the study. For Wal-Mart, 65% of respondents mentioned it for lowest prices.

Wal-Mart captured 50% of the total mentions on best value and only 6% on worst value. Surprisingly, only Target and Hypermart USA have positive value ratings besides Wal-Mart. This was the only market where a hypermarket rated so highly among consumers.

In Dallas, Kmart's share of primary shoppers is only half its share of market coverage, explained Tigert.

"We have concluded that Kmart is probably losing money in Dallas/Fort Worth on a fully located cost basis, after corporate overhead," Tigert noted.

Kmart's highest scores, as in other markets, are for "easiest to get to from home" and "easy to return merchandise." Kmart received a 46% share of mentions on lowest prices, considered a marginal score by Tigert.

Once again, Target is in a strong position in a number of store design dimensions. It does well on fast checkout, and on "best at being in stock for weekly specials." Overall, Target is recognized as having great stores and great promotions.

In Dallas, Wal-Mart was rated most highly on two dimensions -- lowest everyday prices and community involvement. Target rated higher than Wal-Mart by a large margin on advertising, interior signage and lighting levels. While Target is perceived to have much better stores and much more powerful advertising, Wal-Mart is the price/value leader and assortment leader, said Tigert.

To strengthen its position in Dallas, Tigert suggested that Kmart improve its store environment and its casual clothing assortment.

"Target must improve its image on price, value and merchandise selection if it hopes to increase sales per square foot," he noted. "The chain should also consider adding a few more stores."

Wal-Mart could become even stronger by improving store layout and design as well as its position in casual clothing, product quality service and its commitment to new items, Tigert concluded.