Consumer data sheds lights on recent news involving all four companies
A recent Business Insider article pulled back the curtain on shoppers across four prominent retail chains. Using propriety survey data from respected market research and retail insights business Kantar Retail, the article compared consumers of Walmart, Target, Kmart and Kohl’s. Here’s what they found, along with recent news about each company.
Have we hit peak Walmart? Reports from its annualInvestment Community Meeting held last week suggest that we might have, at least in one sense, while the next chapter in the company’s history is only starting to unfold.
The retail giant announced a 5% reduction in capital expenditures in 2017 compared to this year, and plans to open fewer than 60 new stores throughout the country, including 35 Supercenters, 20 Neighborhood Markets and four Sam’s Clubs. It’s a big drop from the 130 stores opening this year (lower than its initial estimate of 135 to 155), and a bigger drop from the 230 stores opened two years ago.
This is not to be taken as a sign of distress for Walmart. Instead, it’s a shift in strategy. According to Kantar Retail’s Laura Kennedy and Timothy Campbell, Walmart expects new growth to be driven by revenue gains at existing storefronts, as well burgeoning e-commerce operations. Its high-profile acquisition of Jet.com in August looks to be a crucial cog in a robust digital strategy moving forward.
Don’t just take Kantar’s words for it. Here’s what Walmart CEO Doug McMillion said at the gathering: “This company, over time, is going to look like more of an e-commerce company.”
According to Kantar Retail’s ShopperScape, the average Walmart customer is a 51-year-old female with an annual household income of $56,482. Interestingly, that number exceeds the U.S. median household income by $4,500, as measured by the U.S. Census Bureau in 2013, which goes against the perception of Walmart as a low-end discount chain. Eighteen percent of Walmart shoppers earn more than $100,000 per household annually. And Walmart shoppers as a whole, actually earn more than Kmart shoppers.
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Joining Walmart in the race to digitize is Kohl’s, which rolled out its own independent mobile payment platform,Kohl’s Pay, last week. Unlike Walmart’s mobile payment system, however, Kohl’s Pay only allows users to make charges to its private label credit card, Kohl’s Charge. There are more than 25 million active Kohl’s Charge cards in circulation, which are used by some of the company’s most fervent enthusiasts. Close to 60% of Kohl’s sales are made using the cards. Kohl’s also recently announced it had purchased a 937,000-square-foot facility in Plainfield, Indiana, which will become its fifth e-commerce distribution center.
Per Kantar data, the Wisconsin-based department store chain boasts the wealthiest shoppers overall. The average Kohl’s shopper comes from a household earning $69,442 annually, just ahead of Target customers. Close to 30% of Kohl’s shoppers live in $100,000+ annual income households. All five chains are dominated by both white and female consumers, but none so much as Kohl’s, whose base is 75% white and close to 80% female.
In contrast to Walmart and Kohl’s, Target is thinking small, at least in terms of store size. The company will open 32 “flex-format” stores occupying less than 50,000 square feet by the end of 2016 and plan for at least 16 more in 2017. The smaller stores allow Target to operate in condensed urban areas with high rent prices, where typical big-box stores are unfeasible.
Along with size deviation, the stores will abandon cookie-cutter product offerings in favor of specialty inventories that are customized to the surrounding neighborhood. One example, cited by Bloomberg, is the chain’s new Tribeca store in New York City, which focuses on baby and kids merchandise in an effort to appeal to the family-dense surrounding population.
Urban centers are also heavily populated by one of Target’s key demographics: millennials. Target shoppers were found to be, on average, 46 years old, and pulling in close to $69,000 per household every year. Target owes its younger average shopper to millennials, who shop at the chain in greater numbers than anywhere else measured by Business Insider. More than 30% of Target’s customers are millennials, a number that exceeds closest competitor Kmart by roughly half a dozen percentage points. Target is also the category leader in the next youngest cohort, Generation X.
Who shops at Kmart is far from the biggest question surrounding the 177-year-old retailer. For months, if not longer, there have been rumblings that the brand was not long for this world. Sixty-eight stores have closed this year, and it was recently announced 64 more closures were coming by 2017. “Big Three” credit rating agency Fitch Ratings just identified Kmart’s parent company, Sears Holding Corporation, as being at a high risk of default in the next 12 months.
Sears Holdings Corporation CEO Eddie Lampert tried to put some of the rumors to rest in a blog post published last week, where he offered an emphatic defense of Kmart. “I also wanted to comment on the frequent false and exaggerated claims surrounding our Kmart business,” wrote Lampert. “Recent reports have suggested that Kmart will cease its operations. I can tell you that there are no plans and there have never been any plans to close the Kmart format. In fact, we’ve been working hard to make Kmart a more fun, engaging place to shop, powered by our integrated retail innovations and Shop Your Way. To report or suggest otherwise is irresponsible and is likely intended to do harm to our company to the benefit of those who seek to gain advantage from posting these inaccurate reports.”
Still, the Kantar data for Kmart is notable in several respects. First, Kmart has the highest percentage of Hispanic and African-American shoppers (15% and 14% of all customers, respectively). Second, it’s tied with Walmart for the highest percentage of male shoppers (just under 25% of all customers), and second only to Target in the highest percentage of millennial shoppers. Most ominously though, it also claims shoppers with the lowest household income of any chain measured in the article, at $55,006.
What? Research compiled by Kantar Retail captures traits and circumstances of Target, Kohl's, Walmart and Kmart shoppers.
So what? The data provides context to recent moves the companies have announced.
Now what? Consider how your organization's customer data stacks up against these four giants, and how your moves are meeting their needs