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Target appears to be losing on everyday items

Minneapolis-based retailer may be relying too heavily on special promotions

Losing share in boring items

Target shares have severely underperformed Walmart over the past three years. (Chart: Barchart.com, Inc.)

Target spent much of Wednesday’s earnings call talking about recent promotions, new product introductions and holiday-related sales. Examples include Target Circle Days, back to school, the launch of a private label outdoor brand, pickleball gear introductions, exclusive Taylor Swift content, and a partnership with fashion designer Dianne von Furstenberg. This helps fill in the profile of retailer’s demographics which also include tired parents who want to pick up an online order while returning an item and receiving their Starbucks order, all from their SUV while their child is asleep in the back seat. 

On its quarterly analyst call, one analyst asked management about the investor perception that the company is losing share on everyday items. It also seems to me that that is what is happening. My theory is that most shoppers that use traditional grocery stores (e.g., Kroger or Albertsons) also frequently visit a big-box retailer (often Target) for better deals on personal care items and nonperishable food items. As a share of grocery sales have shifted to big-box and warehouse clubs given Walmart’s success in growing its grocery segment, it’s likely that some consumers are using the Bentonville-based retailer as a one-stop shop and foregoing their visit to Target altogether. 


Same-store sales seem to support that view. Target’s first quarter same-store sales declined 3.7% following a similar same-store sales decline for all of fiscal 2023. In contrast, Walmart’s U.S. comparable stores sales increased 3.8% in its most recent quarter following a 5.6% increase in U.S. comparable store sales in its fiscal 2024 (ending January 2024). 

The loose freight market is long in the tooth

The national tender rejection rate (white line) and the national spot rate average, excluding fuel (red line) both showed signs of life in May. (Chart: SONAR) 

For those who couldn’t watch it live, a recording of Thursday’s State of Freight is available here. Alternatively, a written summary is available here. The hour-long session included a discussion of how SONAR data reacted to recent seasonal events, such as Roadcheck Week and the leadup to Memorial Day. Last year, those events had very little impact on tender rejection rates and truckload spot rates, two datasets that typically lead contract rates. This year, the impact has been noticeable which may suggest that the freight market is closer to coming into balance. 


Zach Strickland, head of Freight Market Intelligence, advises shippers to not get complacent in the loose freight market, and instead, plan for an inevitable market flip. He also described these dynamics in last week’s Chart of the Week article, which contained many relevant points for retail and CPG shippers.   

Retail industry alarmed by new tariffs

(Image: FWTV)

On Monday’s The Stockout show, Grace Sharkey and I discussed the freight market, tariffs and the impact that extreme weather is having on retail and CPG supply chains.

While last week’s newly enacted tariffs were mainly focused on Chinese tech industries such as electric vehicles and semiconductors, the National Retail Federation is concerned enough about future tariffs to publish a piece that, unsurprisingly, came out against them. Much depends on the outcome of this fall’s election. Both sides favor protectionist policies to some extent, but a potential Trump election, which seems probable if recent polls are to be believed, would likely result in tariffs that are wider ranging in terms of industries and geography (targeting more than just China). 

Widespread tariffs would be problematic for retailers, resulting in higher costs. Consumers have become more cautious with their spending in recent months, so attempts to pass through higher costs in the form of higher prices will likely be met with significant sales elasticity in most categories. The prospect of tariffs also makes managing inventory levels more challenging. The temptation would be to import goods early to avoid fees. That increases the risk of being stuck with too much inventory, a problem that retailers are very familiar with.

Watch Monday’s show here and check out the full playlist here

Extreme weather continues to hit retail and CPG industries


Cocoa is one of many commodities that have surged recently. (Chart: Barchart.com, Inc.)

Two news stories in the past week highlighted more weather-induced supply chain disruption: the flooding in southern Brazil and the Huy Fong Sriracha shortage

Flooding in the southernmost Brazilian state has caused casualties and major evacuations, and it has disrupted several industries. The region is home to cattle production, leather processing, and footwear and garment manufacturing. The severe weather is also disrupting the furniture and food industries.

Meanwhile, the ongoing Huy Fong Sriracha shortage has intensified, with the company shutting down production of the popular condiment until Labor Day. Historically warm weather in Mexico has proved inhospitable for the red winter jalapenos that serve as an irreplaceable ingredient. 

Weather is getting more extreme, and the above issues are just the latest in a long list of recent weather-related supply chain issues. Other recent examples include difficult growing conditions for coffee in central Brazil, almonds in California, sugar in India, cocoa in the Ivory Coast and palm oil in Indonesia and Malaysia.

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Michael Baudendistel

Mike Baudendistel is the Head of Intermodal Solutions at FreightWaves and author of The Stockout, focusing on the rail intermodal, CPG and retail industries. Prior to joining FreightWaves, Baudendistel served as a senior sell-side equity research analyst covering the publicly traded railroads, and companies that manufacture and lease railroad equipment, trucks, trailers, engines and components. His experience following the freight transportation industry also touched the truckload, Jones Act barge and domestic logistics industries. He is a CFA Charterholder.