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Business Week reports on the ongoing battle between Walmart and Target, which seems to have favored Walmart during a recessionary climate where people were looking for any and all ways to save money. One of Target’s problems, the story suggests, is that it relied too much on discretionary purchases, which accounted for more than half of sales.

“For investors and even executives, the crucial question is what happens next,” Business Week writes. “Those who are expecting an improvement in the economy and a recovery in consumer spending tend to favor Target.”

Of course, Target apparently remains committed in general to its “cheap chic” strategy – while it is putting more of an emphasis on low prices, it is being careful not to engage in deep discounting that could erode its brand equity. And Walmart remains focused on its always-low-prices philosophy.

So the central question, analysts say, seems to be what the economy will do – and to what extent consumers will be willing to spend a little bit more money on discretionary purchases: “A slight recovery in the economy could be enough to get shoppers buying again,” Business Week writes. “But it may not be enough to send customers back to pricier specialty and department stores.

“In any environment, the competition between Target and Wal-Mart will remain cutthroat. The onus is on Target to prove it can stop the slide in sales and customer traffic. And, Wal-Mart, with its global reach and deep pockets, is not known for taking competition lying down.”
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