Comparing Walmart and Target Doesn't Makes Sense (But I'm Doing It Anyway)

In the third installment of her annual "Comparing Walmart and Target No Longer Makes Sense" series, Carol Spieckerman examines why the gap between these two retailers has never been wider—or more illuminating about retail's future. With both companies navigating CEO transitions and knee-deep in the holiday season, Carol unpacks how Walmart has evolved into a platform powerhouse while Target grapples with fundamental retail challenges. The comparison may make less sense than ever, but that's exactly what makes it essential listening to understand where retail is headed in 2026 and beyond.

Key Takeaways

• Platform vs. Retailer: Why Walmart's diversification strategy is rewriting retail's rules – Walmart's advertising and membership businesses now represent one-third of consolidated operating income, transforming "diversify or die" from a catchphrase into a survival strategy. Meanwhile, Target's struggling to master basic retail blocking and tackling as its Ulta Beauty partnership heads for the exit.
• The AI and automation divide: How technology is creating an unbridgeable competitive moat – From Walmart's ChatGPT partnership that embeds shopping into daily decision-making to their automated fulfillment centers handling 50% of e-commerce volume, Carol explores how Walmart is building infrastructure for tomorrow while Target’s technology goals remain aspirations.
• Every income cohort: Why Walmart's high-low strategy is crushing Target's traditional strongholds – Carol dissects how Walmart is gaining share across all income levels, as customers pay premiums for the privilege of expedited delivery, while Target is celebrating in-stock improvements as achievements rather than table stakes.
• Leadership tells all: What CEO transitions reveal about retail confidence vs. crisis – Carol examines the wildly divergent leadership communication and succession planning strategies, from Doug McMillon's "aggressive humility" and smooth handoff to John Furner to Brian Cornell's extended farewell tour and Michael Fiddelke's risky opening moves.

Comparing Walmart and Target reveals a fundamental truth about modern retail: you're either building the platform or paying rent to someone who is. Walmart has become retail's operating system—monetizing traffic through advertising, memberships, marketplace commissions, and fulfillment services—while Target remains trapped in traditional retail's margin-crushing cycle. The irony? Every challenge Target faces has become a Walmart profit center. As retail heads into 2026, the question isn't whether Walmart will keep winning, but whether anyone can build an alternative platform fast enough to matter.

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Transcript

 Hi, and welcome to Spieckerman Speaks Retail with me, Carol Spieckerman. I help retail companies sharpen their market positioning so they can get credit for the great stuff they're already doing and accelerate growth. Through my workshops, advisory services, and thought leadership platforms, we'll bridge the gap between where retail's headed next and how you fit into that future.

Here on the podcast, I curate fresh takes on where retail's going next through my latest Retail Trajectories and interviews with experts who help us chart the course. 

Hey everyone. We're back for what's become a yearly event on Spieckerman Speaks retail. We're on round three of "Comparing Walmart and Target No Longer Makes Sense (But I’m Doing It Anyway)." And I gotta tell you that this year the comparison makes even less sense. But that's exactly why we need to do it, because when two major value-based retailers are this far apart operationally, but still broadcasting their earnings one day apart like clockwork, you can't just look away.

And the two main characters are playing fascinating and very different roles as harbingers of retail's future. You've got Walmart as the herald of what's to come and Target, at least for now, as the cautionary tale of how things can go right off the rails. You add in the fact that both companies are navigating CEO transitions and that we're knee deep in the holiday season, and you've got a masterclass in retail divergence.

So let's dig in on what Walmart's latest victory lap and Target's fits and starts reveal about the trajectories for both of these guys, and also where retail's headed in 2026 and beyond. 

Let's start with leadership because corner office handoffs say a lot about a company, and we've got a twofer with Walmart and Target. Doug McMillon opened Walmart's Q3 2025 earnings call with what I call "aggressive humility". Doug said, "We've got momentum, but there's work to do." When you're crushing it this hard, false modesty is almost mandatory, and it's certainly on-brand for Walmart. Doug's handing the keys to John Furner and McMillon's moving to Executive Chairman, which in Walmart speak means "I'm still here if you need me, but honestly, you probably won't."

This is textbook succession from strength. McMillon even said "John's ready. He knows our business so well, and he has the characteristics to lead us into the future". No drama, no surprises, no emergency board meetings, just boring, beautiful continuity that lets everyone focus on execution instead of speculation. How refreshing.

Target, meanwhile, promoted Brian Cornell's protege... oh wait...that's not what happened at all. Cornell is staying put. He's pushing his retirement out and hanging on like a savvy shopper waiting for that final price break. The board basically said, "You know what? Let's just keep doing what we're doing for a little while longer," which, given Target's recent performance, is either deeply optimistic or mildly delulu. Cornell's staying put until February of next year, with Michael Fiddelke already named as his successor, but currently serving as COO. Target is playing leadership limbo. 

In the meantime, Target's Q3 call got off to a cringey start. Cornell opened by listing his accomplishments over the past 11 years. When you feel compelled to remind everyone what you've done, you're usually worried about what you haven't done. Now, that's not to say it wasn't interesting to relive Cornell's greatest hits. He mentioned the CVS Pharmacy partnership, Target's grocery build-out, the billion-dollar owned brands, the stores-as-hub model. Cornell's Target tour did get off to a great start, but things fizzled out as time went on and all manner of distractions popped up along the way.

The litany that he gave read like a greatest hits tour from a band that hasn't released any new material in a while, but hey, some of it did rock. Fiddelke, for his part, is already making moves, including eliminating 1,800 headquarters roles. That's about 8% of Target's HQ footprint. That was a pretty risky first move, but you've got to give him credit, he owned it and took the hit rather than letting Cornell be the fall guy on his way out. But it was framed not as a cost-cutting move, but as removing layers for agility. Sure, Jan. When you're laying off 8% of headquarters while Walmart's investing in AI training for its associates, I guess "agility" is one word for it.

Let's look at those Q3 earnings, where the comparisons become a chasm. Walmart delivered 5.5% comp sales growth, their strongest in years, but the composition of that growth is what really matters. E-commerce was up 22%, marking the seventh consecutive quarter above 20% growth. Membership income was up 22%.

Walmart Connect, their advertising business was up 28% without Vizio and 53% with it. Nice return on investment by the way, on that Vizio acquisition. As I've been saying for years, "diversify or die" is retail's new rule and Walmart's diversification into highly profitable businesses like advertising and marketplace expansion are propping up profits, even as Walmart surgically cuts prices on necessities.

When marketplace sales are growing 17% and filling assortment gaps that Walmart is identifying through AI, that's symbiotic growth, and it's wooing those higher-income shoppers onto Walmart's platform. Don't want to come to the store? Fine. The stuff you like is on walmart.com anyway. 

John David Rainey, their CFO, dropped this truth bomb. He said "The combination of advertising and membership fee income represented approximately one third of our consolidated adjusted operating income." One third. That's not a side hustle anymore, folks. And here's the knife twist for Target: Walmart's gaining share in every income cohort. That includes those upper-income households that Target thinks belong to them.

Walmart's not just winning on value, they're winning on convenience, selection, and increasingly on customer experience. All of it contributing to Walmart's high-low mojo. Target's Q3 comp sales were up 0.3%. That's not growth, that's a rounding error. Operating margin at 4.6% versus Walmart's 5.5% digital growth of 11%? Exactly half of Walmart's and earnings were down 12%. 

But the real tell is in the details. Target spent significant time explaining what it called "strategic resource allocation." That's corporate speak for, "We're cutting costs because growth isn't happening." They talked about intentionally keeping inventory growth below sales growth.

Walmart's inventory management has become so refined and sophisticated, they can talk about having "healthy inventory" going into the holidays with confidence. No hedging, no concerns, just "We are ready." Target's Chief Commercial Officer, Rick Gomez, did talk about Target's retail media arm Roundel delivering double-digit growth. That's great, but when Walmart Connect is growing at 28% and actually contributing materially to operating income, Target's more generalized and downright sheepish mentions of Roundel fade into the background. Walmart's transformed from a retailer into the ultimate platform player, and basically they have become a retail operating system.

They're not just selling products, they're selling access to customers, fulfillment, infrastructure, data insights, and advertising opportunities. Listen to McMillon's comment about AI. He said, "When AI is used for software development, more than 40% of the new code is either AI-generated or AI-assisted." So Walmart's not just using AI, they're leveraging AI to build more AI capabilities. Walmart's all about compounding effects, and this one really counts. 

What about Walmart's scoot over to NASDAQ? I don't think this is getting enough attention because moving from the New York Stock Exchange to NASDAQ, even though it's symbolic, it's also strategic. It signals to the market and to talent what Walmart really is now and what it aspires to be in the future.

I'll say it again, Walmart is a tech platform, not just a company that sells stuff. Then there's the Chat GPT partnership. Walmart's done a masterful job of meeting customers where they are, now, they're meeting them where they're being inspired and educated and making it instantly actionable. When McMillon talks about multimodal experiences and contextual shopping, he's describing a future where Walmart's embedded in your daily decision making, not just your shopping trips.

I joined a recent Retail Dive webinar as a subject matter expert, and the conversation we had ties right into this. Lindsay Banks from MikMak talked about how consumers are moving from discovery to purchase faster than ever, with the caveat that brands have to remove the roadblocks first. But that's what Walmart's doing, obliterating those roadblocks.

Carlos Garcia from Pinterest talked about how Pinterest is evolving into a viable shopping channel by adding "buy now" and "where-to-buy" capabilities. I want to double-click on where-to-buy because that's where Walmart's platform power and partnerships with Open AI come in.

It's determined to own the journey from inspiration and information to activation and purchase. In the webinar, I talked about the importance of balancing mix, media, and message. Walmart's hitting on all three with its app improvements, expanded marketplace, and multi-platform integrations. As Katie Kelleher said in the webinar, "all media is performance media." Walmart couldn't agree more.

When John Furner talked about Walmart's digital agent, Sparky, taking action on behalf of customers, he's describing agentic commerce. AI that doesn't just recommend it actually executes. Combine that with the ChatGPT partnership and Walmart's building a future where friction in shopping approaches zero and shopping happens at the moment of inspiration.

Walmart's example from Chile paints the picture. Creating complete customer orders via WhatsApp that customers can then accept, modify, or reject. It already represents 20% of their Chilean e-commerce business, so that's not a test, that's a transformation in progress. And the fact that Walmart can use international markets as testing labs for capabilities that they can then roll out globally is another massive diversification advantage.

Every lesson that Walmart learns in China's advanced digital market or Chile's, mobile-first economy is an advantage that Target inherently can't match. Travel, test, learn, repeat. 

Target's technology initiatives sound impressive until you compare them to Walmart's Execution. Target's Gen AI-powered gift finders really nice, but it's basically a chatbot. There are synthetic audiences for testing campaigns. Walmart's already moved past testing to execution with actual personalization at scale. The most telling moment was when Fiddelke said that Target needed to "more fully use" technology to improve speed, guest experience, and efficiency. The fact that this is still an aspiration rather than an accomplishment in 2025 is pretty damning.

Target threw out a slew of initiatives, talking about Fun 101. They're creating something called Target Trend Brain, using Gen AI to identify trends. They have synthetic audiences to test campaigns. They're calling their merchant teams a Merchant Roundtable, all these branded initiatives and cute names feel like 2015 Retail Strategy dressed up for 2025. And it's downright confusing in some cases. The Fun 101 moniker in particular seems convoluted and not really baked out. It wasn't until the end of the earnings call that they even spelled out what it actually is. Turns out it's just another name for hardlines, but make it fun.

In all fairness, Fiddelke inherited all of this, so we'll see what sticks in a few months and if Target decides to keep playing the name game. In the meantime, Walmart is in full doing mode, already talking about taking action on behalf of customers through agentic AI. One company's building infrastructure. The other one, for now, seems to be building vocabulary.

Let's talk about operations because that's where the rubber really meets the road. Walmart, CFO mentioned that more than 60% of their stores are receiving freight from automated distribution centers, and more than 50% of their e-commerce fulfillment center volume is automated. Walmart's always been known for its supply chain chops. This is the next wave that will have Walmart elevating its supply chain to levels no one saw coming But here's the key insight: about 35% of Walmart's store-fulfilled orders were delivered in under three hours, and sales through these expedited channels increased nearly 70%.

These are orders where Walmart customers actually pay an upcharge for speed. So Walmart's customers are paying premiums for convenience, and in the process funding Walmart's delivery density expansion. That's bringing costs down, and I'm betting that plenty of those near-instant gratification shoppers are in that higher income bracket that Walmart's been doing a great job of wooing, and that's making a really big difference in their business.

Those customers can proudly claim that they never set foot in a Walmart store. Or hardly ever, and I've actually heard this brag in the wild, but now these folks are coming out of the closet. They shop with Walmart, even if they don't shop at Walmart. Hey, baby steps, right?

I joined a Rethink Retail Cloud Alliance podcast on the new definition of value recently, and one of my weigh-ins really ties in here. Shoppers want to feel smart about buying the stuff that they are allowing themselves to buy. It's an emotional trigger across all income levels, and Walmart is scratching that itch. 

Target, on the other hand, is still talking about getting the basics right. Michael Fiddelke admitted that they haven't been good enough on in stocks in the last several years. They're celebrating 150 basis point improvement in on-shelf availability for their top 5,000 items. That's nice, but when you're celebrating being in stock as an achievement rather than a given, you're already behind. Walmart doesn't talk about in-stock rates so much because it's assumed. Target's talking about it because it ain't happening.

Walmart barely mentioned tariffs except to note that they're managing through them. Why? Well, because their supply chain is so diversified and efficient that tariffs are just another variable to optimize around. Also, they probably didn't want to punch a political hot button, but either way, they're messaging, resilience.

Their automation investments are also paying dividends. Shipping costs are down and the 30% range consistently. When your fulfillment costs are dropping by a third, while your e-commerce volume is growing by 22%, you're achieving the holy grail of retail operations, scaling efficiency. The fact that Target's celebrating getting half the US eligible for next-day shipping when Walmart's already delivering 35% of their orders in under three hours, and shoppers are paying for the privilege, shows how far behind Target is. Target is solving for tomorrow. Walmart is solving for the next hour.

But let's address the elephant in the room, market position and competitive dynamics. When Walmart says that they're gaining share across grocery, health and wellness, and general merchandise, they're not just winning. They're redrawing the competitive map. Fashion up every month, home and hard lines growing. This is Walmart finally cracking the code on fixing those "unfavorable mix shifts" they kept talking about several quarterly calls ago. But the big takeaway is that these categories are Target's traditional strongholds. Yikes.

And here's a real buzzkill that hits Target right where it hurts. Target's, Ulta Beauty partnership will go dark in August of 2026. Brand partnerships are Target's calling card, and this one was a crown jewel hookup that instantly elevated their beauty authority. And I'll take it a step further. The Ulta boutique gave Target stores an instant facelift. The fact that it's ending and that Target didn't mention it once during their main presentation suggests that this "authority," they keep talking about either isn't there or it's not translating to results.

The Ulta Beauty exit is devastating, not just for the lost revenue and potential nosedive in a really important category, but for what it signals. If Target can't make a partnership with Ulta work, a perfect brand fit with aligned demographics, what does that say about their overall platform value and their ability to forge similar partnerships down the road? And yeah, to position as a happening advertising platform.

The cascading effect from this one departure is scary. Now, their new partnerships sound impressive. You got Marks and Spencer, Magnolia Table, exclusive Lego sets, but these are really vendor relationships, not platform partnerships. Target's a customer for these brands. Walmart is becoming the infrastructure.

The holiday positioning though, reveals everything about where these companies are and where they're going. Walmart raised guidance again. Fourth quarter comp sales are expected to hit a 3 to 4% increase. They mentioned that holiday is off to a great start and that customers are leaning into their seasonal events.

But here's what's really interesting, John David Rainey mentioned that if currency exchange rates stay where they are, they expect a $1.1 billion benefit to reported sales growth in Q4. When you're big and diversified enough that currency fluctuations add a billion dollars to your quarter, you're operating at a completely different scale entirely.

Fiddelke's' quote about Q4 is dripping with hopium. He said, "We want to make sure we have the ability to react quickly to changes in the environment." That's not confidence, that's crisis management. When Walmart's raising guidance and you're talking about prudent expectations and reflecting on volatility, you're not planning to win, you're planning not to lose too badly. When Walmart talks about newness, it's all about marketplace expansion that fills assortment gaps and makes higher-income shoppers take a second look. When Target talks about newness, as it often does, it's about apri-ski cashmere-like sweaters and exclusive Barbie collaborations. Once again, Walmart's building infrastructure. Target's, leaning into merchandise, branding, and plan scarcity, also known as its traditional comfort zones.

So let's talk margins. Walmart's doing something remarkable. They're improving margins while cutting prices. How? Well, going back to that business mix mojo, that they're finally perfecting that advertising revenue, those membership fees, the marketplace commissions, they're all high-margin additions to a low-margin base business.

What it means is that Walmart can afford to slash prices on low-margin categories like grocery and make it up somewhere else. So when a third of your operating income comes from non-product sources, you can afford to be aggressive on pricing. It's a virtuous cycle. Lower prices on frequently purchased categories drive traffic, traffic drives advertising value, advertising drives margins, and margins enable lower prices. Target's gross margin was down 10 basis points with about a percentage point of pressure from higher markdowns. They're caught in retail's classic trap. They need to discount to drive traffic. But discounting kills margins, which limits investment, which hurts competitiveness, which requires more discounting. Target doesn't have that diversification that Walmart has to offset all of it.

The customer insights from both calls are fascinating. Walmart's talking about knowing customers so well that they can predict their baskets. They're using that transactional data, not just for recommendations, but for proactive fulfillment. So when they say that they can anticipate needs and help customers with nudges about staying in stock, they're describing a relationship that goes far beyond traditional retail. They're becoming a household operating system.

Target, on the other hand, is talking about synthetic audiences and testing how different groups respond to campaigns. They're simulating customers while Walmart's serving actual customers with personalized experiences. The fact that Target's still trying to figure out customer segments while Walmart's operating at an individual customer level, reveals a yawning gap in capability.

Let's talk investment. Walmart's investments compound. It's what they do best. Their supply chain automation reduces costs, which funds price investments, which drives traffic, which increases advertising value, which improves margin, which funds more automation. It's that flywheel that Walmart used to talk a lot about, and it accelerates with every turn.

Their investments in Associate AI training are particularly smart. As McMillon said, their associates "care, learn, step up and change". By investing in AI capabilities for associates. Walmart's not just improving operations. They're future-proofing their workforce. And something they don't get enough credit for, they're also preparing associates for the future of retail work that benefits the entire industry as these upskilled folks migrate to other companies. Target's planning on spending $5 billion next year, about $1 billion more than this year. Fiddelke calls it investing where they see strong returns, but if you're investing to catch up rather than to extend your lead, returns are harder to achieve. When Walmart invests. They're building tomorrow when Target invests, they're trying to fix yesterday, or at least I hope that's what they're doing. There was some fence riding going on during the call, with Target positioning as both a fixer-upper and future-ready. They really need to eat that spinach before they hit dessert.

And even though actions speak louder than words, words matter. True leadership requires clear communication. Walmart's executives speak in outcomes, not intentions. "We delivered." "We achieved." "We grew." When they talk about the future, it's with specificity. "35% of orders in under three hours." "50% of fulfillment center volume automated." McMillon's quote really stands out when he said, "The company and our team's ability to change should not be underestimated." So that's not wishful thinking. It's a promise that Walmart won't just keep up. It's gonna stay out front. Doug McMillon made another comment that really deserves emphasis when he said, "I think it's really worth pointing out that this is the moment for a business like ours." When you've been in retail as long as McMillon has, and you call this freaky era in retail "the moment," you're radiating confidence. And they're not one to brag, but as they say in Texas, "It ain't bragging if it's true."

You contrast that with how Target talks about their business. Fiddelke saying, "We're not satisfied." Gomez: "We still have work to do." Cornell: "Our business has not been performing to its potential." When your entire leadership team is apologizing for performance during an earnings call, you're not in the driver's seat. But you have to appreciate the honesty and willingness to fall on the sword. That's some real newness after a too-long stretch of denial, defensiveness, and defiance. 

Still, Target's leadership used a lot of words to say very little. Fiddelke's explanation of in-stock improvements took several paragraphs to essentially say, "We're getting better at having products on shelves." To be fair, Doug McMillon has had years of on-the-job leadership training. He didn't start off as a silver-tongued devil and model of CEO splendor, but to his credit, he certainly evolved into it, and Furner looks likely to follow the template.

Fiddelke is under a lot of pressure right now, but unfortunately, that only makes his articulation evolution even more urgent. I'll say it again, Target needs a vision and Fiddelke's in charge of casting it and evangelizing it.

Based on these earnings, here's what I'm seeing For 2026, Walmart will continue to blur the lines between retailer, technology, company, logistics provider, real estate developer, and media platform.

The question isn't whether Walmart will grow, it's which industries they'll disrupt next to drive that growth and how it connects to and energizes their current platform. Target faces an existential choice in 2026. Do they double down on being a better retailer or attempt a platform transformation?

That $5 billion CapEx investment suggests that they'll try to do both, but that they'll lean into option one. That might be realistic, but it definitely won't be revolutionary.

Fiddelke takes over in February and I'm going to be watching that March financial community meeting in particular. He and other Target executives talked about it throughout the call. There was a real "Just you wait" tone surrounding it, so they can't afford to make that event a nothing burger. After officially taking the helm, Fiddelke's going to have maybe six months to show progress before Back-to-School 2026 becomes his first real test. If that doesn't deliver, expect major strategic shifts by holiday 2026, or if you want to feed into the buzz machine, maybe even an acquisition. And I'm talking about Target being the Target.

So what does this comparison teach us about retail's future? Walmart's proving that in the platform economy, scale and diversification aren't just advantages. They're the entire game. Walmart's ability to spread costs across a massive base while monetizing that base in multiple ways creates a competitive moat that's essentially unbreachable.

I'll say it again, diversification is Walmart's not-so-secret sauce. Target's dabbled in diversification, but it doesn't seem to be reaching its full platform potential at this point. That's understandable when so many fundamentals just aren't clicking. But Target struggles show that traditional retail just isn't good enough anymore. Great merchandising, nice stores, clever marketing...these are all table stakes now, not differentiators.

So why do I keep comparing Walmart and Target when it makes absolutely no sense? Because sometimes the best way to understand where retail's going is to compare someone who's driving the bus with someone who's chasing it.

The irony is that Target struggles validate Walmart's strategy. Every challenge Target faces, whether it's margin, pressure, customer acquisition costs, fulfillment, complexity... Walmart's turned it into a revenue stream. Target's problems are literally Walmart's profit centers. As we head into holiday 2025 and look toward 2026, remember this: in retail's platform economy, you're either building the platform or paying rent to someone who is. Walmart's the landlord. Target is still negotiating leases. So the really interesting question isn't whether Walmart will keep winning. They will. It's whether anyone can build an alternative platform fast enough to matter. Until someone figures this out, I'm gonna keep comparing Walmart to everyone else, including Target because it shows us what's possible when a retailer stops thinking like a retailer and starts operating like a platform. The only thing that makes less sense than comparing Walmart to Target is not learning from the comparison. 

Thanks for listening in today.

I hope you enjoyed the episode. And if you did, please like, share and subscribe. You can invite me to your organization or event to bring conversations like this to life in your spaces. That's what I do. B2B, coaching, training, and executive consulting. If it has to do with retail thought leadership, B2B, market positioning, and business development, it's probably something I can help you with.

If you're interested in learning how we can work together, reach out to me @spieckermanretail.com or email team@spieckermanretail.com to book a discovery call. Until next time, keep speaking retail.