Target (NASDAQ: TGT) has enough sales problems. Its stock was battered when it recently announced earnings and a poor forecast. This Black Friday, it faces the steepest competition in its history. In addition to Walmart (NYSE: WMT) and Amazon.com (NASDAQ: AMZN), it is up against surging Chinese retailers Temu and Shein, who invest huge sums to draw online retail customers. The Chinese have upped their investment to draw even more customers this weekend.
According to Reuters, Temu is buying search engine keywords, primarily on Google, including “Walmart Black Friday deals.” The number of keywords purchased ranges well into the thousands. Walmart has a tremendous online presence to help it this season. Target is vulurerable. And, Temu and Shein are new and troubling competition.
The Chinese companies have expanded their efforts, increasing their investments and likely financial yields. They have moved their marketing to Facebook, Instagram and TikTok.
Temu, in particular, is a threat to US retailers. It has enormous traffic and uses a model almost identical to Amazon’s. However, it sources virtually all its merchandise in its home market of China and ships most of its orders from there.
Target signaled its weaknesses as the holidays approached. Same-store sales in the most recent quarter rose only 1.1% to $25.2 billion. EPS dropped 12% to $1.86. Comparable store sales rose only .3%. Target’s online digital sales rose by only 10.8%, short of its larger rival, Walmart.
Temu and Shein are after the US market. Target is the most troubled brick-and-mortar retailer.
It won’t be a jolly season for the American retailer.
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