In theory, Target should be thriving in the recession because it's a discount retailer. In reality, it's in a funk, even as rival Wal-Mart flourishes, reports Time. The difference? Target is viewed as a place to buy nice clothes at nicer prices—and right now, nice clothes seem like a luxury. Target’s profits fell a whopping 22.3% last year, while Wal-Mart has seen 22 straight months of growth.
The main problem is that Target devotes about 40% of its shelves to home and apparel, and less than 20% for perishables such as food and cosmetics. Wal-Mart devotes 45% to consumables. “Wal-Mart sells what you need to have,” said one retail consultant, “as opposed to what you want to have.” Target’s also dealing with a huge albatross: a credit division that saw profits fall 80.5% last year.