costco-and-target-have-a-huge-edge-over-walmart-(it’s-not-price)

Costco and Target Have a Huge Edge Over Walmart (It’s Not Price)

Low prices drive shoppers to stores but they don’t necessarily make them like shopping at those stores. That’s something Walmart (WMT) – Get Walmart Inc. Report has long had to deal with. 

It has locations within 10 miles of 90% of Americans. That means that a percentage of its shoppers likely visit for convenience, not because they love the chain.

Walmart has enjoyed a geographic advantage over two of its chief rivals, Target (TGT) – Get Target Corporation Report and Costco (COST) – Get Costco Wholesale Corporation Report. Target has 1,931 locations and claims that “75% of the U.S. population lives within 10 miles of a Target store.” 

The chain has also been enhancing its footprint by using smaller stores to allow it to go places it previously couldn’t.

Costco has an even smaller in the U.S,. with only 573 warehouses,

Walmart conversely has 4,742 U.S. locations. That gives the chain an edge as its low prices and near-ubiquity make it very convenient for shoppers. 

The problem — and it hasn’t been one that really shows on Walmart’s bottom line — is that customers like Target and Costco a whole lot more than they like Walmart.

Walmart Plus Lead

Study Shows Walmart is the Least-Liked Retailer

Walmart scored well below Target and Costco on the recent American Customer Satisfaction Index (ACSI) retail study

The report is based on interviews with 36,517 customers, chosen at random and contacted via email between Jan. 11, 2021, and Dec. 20, 2021.

Put simply it’s a thorough report that’s conducted annually and Walmart finished at the bottom of the pile in retail, drugstores, supermarkets, and online retailers. 

Its scores were also well below the average for each industry.

Here’s a look at how the company compared to the average score in the four categories it was rated in.

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  • Retail:75, Walmart 71
  • Drugstores: 76, Walmart 71
  • Supermarkets 76, Walmart 70
  • Online retail: 77, Walmart 72

That’s not the only bad news for Walmart. The company saw its score drop in every category year-over-year except retail where it stayed the same. 

Walmart, with its 70 in supermarkets, also had the lowest score of any company in any retail-based store polled for this ACSI survey.

To put Walmart’s rankings into perspective, generally, only much-disliked cable and internet providers score less than 70 on ACSI surveys. 

A low satisfaction ranking, however, may not be Walmart’s biggest problem. Instead, it might be that Costco and Target are beloved by their customers.

How Do Costco and Target Rank?

Costco has the top score for general merchandise retailers with an 81. 

That’s the same number it posted in 2020 when it also topped the category. 

Target scored a tie for third place among general merchandise retailers, behind the warehouse club and Nordstrom, tied with Kohl’s and Walmart’s Sam’s Club at 78.

Neither Costco nor Target was ranked in the drugstore category meaning that neither is considered a drugstore by ACSI. 

CVS, however, which operates in Target led that category with a score of 80. 

Costco does sell prescription drugs at some of its warehouses, but it is not considered a full competitor in the space.

Costco does not top the supermarket rankings — that honor always goes to Trader Joe’s — but its 81 puts it in third place. Target scores a 77 in grocery, putting both chains well ahead of Walmart’s 70.

People very clearly like shopping at Costco and Target more than they like shopping at Walmart. 

That may not hurt Walmart’s business as it has been a category sales leader for decades, but it could open the door for its rivals to take market share as they grow, or in Target’s case, if more customers opt for digital or delivery orders.