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Target Corp. Message Board

  • scorpio_india71 scorpio_india71 Oct 29, 2005 9:43 AM Flag

    Merge TARGET with COSTCO

    What does everyone else on the board think?
    I think if these two giants merge it will be really good for these two companies and these companies will be able to compete with WMT headon.

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    • Pure opinion below. I don't think there are real economies of scale here. This sounds like a MergAq to make Wall Street happy, and WS sees through those now.

      WMT has the advantage of more stores. This creates some leverage with supply chain. They can move the needle so to speak in a variety of product lines. There are a lot of product lines which TGT and COSTCO are very competitive price wise with WMT. COSTCO/TGT would still lag WMT on number of stores.

      TGT and COSTCO combined might be good on the packaged food side of the business, but overall margins there are usually less than 3-5% of sales. Food / grocery is a velocity business. Foot traffic is the name of the game. COSTCO won't generate traffic for TGT and vice versa.

      I don't see enough commonality on the hard goods side which is were TGT is wearing out WMT on quality / style which drives sales for upscale shoppers. Much higher margins here as well vs food and office supplies.

      Lastly, I believe in focus. Stick with your knitting. Do what you know best. Eliminate distractions. Be the best at what you are good at.

      TGT is about merchandidsing and store condition and style of the store etc. Think about those favorite department stores you went to as a kid if you are old enough. Most people shopping TGT are looking for a comfortable, uncrowded, high quality shopping experience and will pay a little more for it.

      WMT is not TGT.

      COSTCO is a warehouse shopping environment and style is not part of their game from stores I visit.

      • 3 Replies to cceforlife
      • Thats exactly why this merger makes perfect sense, since they are complements to each other like husband and wife, like sams and wal-mart, wholesale and retail.

        Just imagine the expansion of Costco in US in locations where Target is present(not all) and opening up a wholesale center, just like Sams club and Target going International leveraging Costco's International experience and distribution network and product line. WMT get more than 57 billion dollars just from its International operations and Target makes only $50 billion in total. Just imagine the possibilities.

        I think if this happens, WMT may become history. WMT is trying to improve its image to upscale where Target and COstco already are, combined they can do better.

        I would encourage any thoughts.

      • Move the needle? what is wrong with you?

        A Costco Merger would make sense because it would put more pressure on Walmart and it will allow the company to cater to a new consumer group.

        Do you know who Target's guests are?

        Taking profits from WalMart is always a win-win situation.

        WalMart is an embarassment to America and American values.

      • <<Most people shopping TGT are looking for a comfortable, uncrowded, high quality shopping experience and will pay a little more for it.

        WMT is not TGT.>>

        I know. WMT is actually crowded with shoppers.



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