Given that Walmart exceeded expectations and raised its full-year outlook while Target missed and revised its outlook downward, many analysts and commentators have concluded that Walmart is taking share from Target and disrupting Target’s market position and business model. However, Placer.ai data reveals a more nuanced story: Walmart and Target appear to be diverging rather than directly competing when it comes to in-store visits. In fact, the data suggests less overlap between their customer bases than might be assumed.
Instead, Target appears to face greater competition and encroachment from retailers such as Costco, Trader Joe’s, and Amazon. The significant growth in Amazon’s U.S. Gross Merchandise Volume (an estimated +$70 billion this year, largely in general merchandise) is indicative of the competitive overlap. Our hypothesis is also supported by shopper demographics and cross-visitation trends among physical retailers. The table below uses Experian Mosaic data and the sum of squared differences to measure customer similarity between retailers. The findings show that Costco’s customer base differs from Walmart’s by a factor of 2.8X compared to Target’s, while Trader Joe’s differ by a factor of 1.9X. This indicates Costco's and Trader Joe’s visitors have far more in common with Target's than with Walmart's. Conversely, Walmart’s customer base overlaps more significantly with Sam’s Club and Aldi shoppers.
Placer's Favorite Brands tool highlights that Target is facing increasing competition from Costco and Trader Joe’s, with growing cross-shopping behavior suggesting potential market share loss. The impact of Trader Joe’s encroachment on Target is particularly notable. Year-over-year, cross-visitation by Target shoppers to Trader Joe’s rose from 19.3% to 25.6% for the fiscal quarter, representing a 31% increase in the number of Target customers visiting Trader Joe’s. However, when viewed from the opposite perspective, Trader Joe’s customer base grew by 6%, while Target’s penetration among Trader Joe’s shoppers declined—indicating that some Trader Joe’s customers opted out of visiting Target. This shift is significant, as these competitors—particularly Trader Joe’s and Costco—are heavily focused on the grocery category. While Target reported low-single-digit comparable sales growth in groceries, consistent with the broader industry, it missed an opportunity to gain share, likely due to competitive encroachment from these players.
Walmart continues to capture significant market share, particularly from households earning over $100K annually. This success is driven by three key factors: (1) enhanced convenience through curbside pickup and fast store delivery; (2) improved store standards and merchandise appealing to higher-income shoppers while retaining its core moderate- and middle-income customers; and (3) the rapid growth of its third-party marketplace, which grew 42% in Q3 2024 and informs both its first-party in-store and online offerings. These factors collectively contribute to Walmart’s above-market growth in the U.S.
For the quarter, Walmart’s store delivery business grew 50%, contributing to overall digital sales growth of $3B. With store delivery now accounting for approximately $26B annually, over 30% of orders are expedited deliveries, with customers paying for delivery within one or three hours. In comparison, Target’s store delivery business grew about 20%, curbside grew in the double digits, and digital sales increased by $550M, with store delivery estimated at $1.3B annually. Target is earlier in developing these services, having launched Target Circle 360 in March 2024 compared to Walmart+ in 2020.
Walmart+ and Target 360 are largely competing for the same households. It's unlikely that many households would maintain memberships with both Target Circle 360 and Walmart+, especially as most of these households are also Amazon Prime members.
Over the past two years of "unprecedented" inflation, we’ve often highlighted how consumers are becoming highly selective in their spending, prioritizing retailers offering the best prices. Walmart, with its strong brand credibility for price and value, has leveraged this inflationary environment to reinforce its core strengths effectively. Walmart U.S. CEO John Furner noted that the quarter’s grocery volume growth rate was the highest since the pandemic.
Unlike many essentials-based retailers and grocers facing declines in units per transaction (UPTs), Walmart’s grocery sales increased mid-single digits—double the growth rate of the conventional grocery channel (+2.5% per Census). Walmart has also used its frequent customer visits, driven by its grocery offerings, to showcase its improved stores and enhanced merchandise. As illustrated, Walmart averages 2.6 times more weekly shopping trips than other retailers, further solidifying its advantage.
Walmart sees 10% more extended visits (visits exceeding 30 minutes in dwell time) compared to competitors, and longer visits—excluding time spent checking out—are typically associated with fuller baskets across more categories.
Evidence of Walmart's success in encouraging broader shopping behavior can be seen in the +0.9% year-over-year increase in visits lasting over 15 minutes, indicating more browsing. In contrast, Target experienced a -1.5% decline in longer visits during the same period.
This increase aligns with Walmart management’s observations that consumers are purchasing from more categories, reflected in the rise of its comparable basket. The average ticket for the quarter grew +2.1% (+1.1% excluding GLP drugs), with gains driven by general merchandise even as that category faced 400 basis points of deflation.
Target's and Walmart's curbside and store delivery services do cannibalize in-store visits from more affluent households. Consequently, the declines in affluent customer segments, as defined by Experian Mosaic and shown in the table below, are expected. However, Placer data reveals that Walmart has been more successful in backfilling these lost in-store visits with new households. Additionally, as highlighted in earlier reports, Costco has experienced a strong year of membership and market share gains, with some of these wins likely stemming from visits previously made to Target. Lastly, the -8% decline in Target shoppers visiting Walmart may not reflect less cross-shopping, but rather a shift in their shopping behavior, as they increasingly shop Walmart through alternative channels like Walmart+ instead of physical stores. This aligns with our earlier comments on Walmart+ and Circle 360 dynamics.
Target’s Q3 2024 results were marked by declines in basket size, merchandise mix, and profitability. While merchandise mix has been a challenge for both Walmart and Taret over the past two years, Walmart saw improvements this quarter, with sales up low-single-digits and units up mid-to-high single digits. By contrast, Target experienced a worsening trend, driven largely by a -1.9% decline in "inside the box" comparable-store sales, which includes categories like home and hardlines—areas where Costco, Amazon, and Walmart have shown strong momentum. Assuming the reported companywide comparable-ticket decline aligns with in-store comparable-store sales, Target’s comparable transactions appear to be roughly flat, consistent with Placer data showing visits per location down -0.8%. Same-day delivery subscription growth from Shipt and Target Circle 360 added approximately 130 basis points to comparable-store sales growth, while curbside contributed an additional 90 basis points, with curbside now representing a roughly $9 billion channel.
Target CMO Rick Gomez commented on consumer behavior, noting, “The consumer is largely consistent with what we've shared in prior quarters. Consumers remain pressured but are willing to spend when they find the right balance of on-trend newness at compelling price points. They continue to make difficult trade-offs, trying to save on everyday essentials to free up budget for new must-have items. Beyond resilient, consumers have also become increasingly resourceful. They know there are deals to be found, and they’re willing to wait for sales and search across multiple retailers to find them.” This sentiment aligns with cross-shopping trends and the broader industry theme of "no one staying in their own swim lane," compounded by a loss of units per transaction (UPTs).
Target CEO Brian Cornell added, “We're seeing a stronger response to promotions than we've seen in some time,” with Gomez highlighting that Target’s Circle Week was one of its biggest yet. However, Gomez noted a more pronounced sales dip in the weeks before and after the event, emphasizing how strategic and deal-focused consumers have become. This trend is evident in Placer’s traffic data below. Notably, Target guided for flat comparable-store sales in Q4 2024, likely influenced by these post-event traffic dips.
