The holiday spirit arrived early for Target Corp. (NYSE:TGT) and Wal-Mart (NYSE:WMT), as the big-box retailers kicked off their holiday campaigns earlier than ever this year. Not only do both discount chains plan to open on Thanksgiving day, but they also released their respective digital holiday catalogs shortly after Halloween, thereby giving shoppers a super-early sneak peak at upcoming Black Friday deals. Wal-Mart was extra-ambitious by kicking off its holiday layaway program in August.
However, it's going to take more than these premature moves for Target and Wal-Mart to dominate the holidays in 2015. Let's take a closer look at each company's strategy heading into the critical holiday shopping season to determine which retail stock is a better bet for your portfolio.
Target could steal the show when it comes to repeat visits this year. The company has more than a few tricks up its sleeves to get customers back into its stores even after the much anticipated doorbuster events on Black Friday. One way Target plans to do this is with its "10 Days of Deals" campaign. Target will offer guests not one, but 10 days of Black Friday-esque deals beginning on Nov. 22. The promotion is aimed at getting repeat visits from its top spending customers
On top of this, Target will give customers a 20% discount to use toward a future purchase when they spend $75 or more on Black Friday. The catch is, they need to use their 20% discount between Dec. 4 and Dec. 13 -- yet another way Target plans to draw repeat traffic both in-store and online. Oh, and then there are the Target gift cards.
Target plans to dish out gift cards for participating purchases on Black Friday. For example, those who buy an iPad Air 2 will automatically get a free $150 Target gift card. Apple watch purchases render $100 Target gift cards, while Xbox One bundles will earn purchasers a $60 gift card. Target is giving out gift cards with a range of products including GoPro cameras, televisions, and drones.
Wal-Mart's strategy for repeat visits is less clear. The discounter does plan to offer daily deals through its mobile app, but overall Target appears to have a more diversified approach to getting consumers to come back for more throughout the holidays.
Capturing the online shopper
Target and Wal-Mart also differ in their holiday approach to online shopping. Target, for example, is offering online shoppers free shipping on all orders between Nov. 1 and Christmas day. Wal-Mart, on the other hand, is offering free shipping but only on orders over $50. This is a smart move by Target because it should help the bull's-eye brand better compete with e-commerce giant Amazon.com (NASDAQ:AMZN). The world's largest e-tailer, after all, offers unlimited free shipping year round for its Prime members.
Target is also making all of its Black Friday deals available online at Target.com, in yet another attempt to boost online sales during the holidays. Meanwhile, Wal-Mart is taking more of a mobile-focused approach this season. The discount chain is urging consumers to download its Wal-Mart app, which will feature exclusive offers and notify users when holiday rollbacks and promotions go live. Wal-Mart anticipates more than 210 million visits to its mobile app during the 2015 holiday season. The mobile angle should pan out nicely for Wal-Mart, considering as much as 32% of Black Friday e-commerce sales came from mobile devices last year, according to data from Criteo. Specifically, Wal-Mart predicts that nearly 75% of traffic to its website during November and December will come from mobile.
Moreover, both Target and Wal-Mart are running daily online deals in the days leading up to Black Friday and the official kickoff of holiday shopping. It seems both retailers understand the importance of having a well-integrated mobile and digital strategy heading into the holidays.
Hoping for a strong turnout
Target and Wal-Mart are both hoping for a strong consumer turnout on Black Friday and the subsequent holiday shopping days. Wal-Mart said it heavily stocked popular merchandise this year to make sure customers could get the deals they wanted. "Walmart will never be the retailer that broadcasts a great price on Black Friday and then ends up only having a few in stock," said Steve Bratspies, Wal-Mart's chief merchandising officer.
However, overstocking inventory could come back to bite Wal-Mart if the U.S. consumer isn't as strong as it has anticipated this year. "We bought deep on televisions, toys and more to ensure hundreds of customers in a store -- not tens of customers -- get the gift they want," Bratspies continued.
Nevertheless, consumers can expect both big-box stores to have plenty of deals on televisions and gaming consoles this year. Other perks that shoppers will find at both retail chains include price-match guarantees, curbside pickup, and daily online promotions.
Wal-Mart gets high marks for its seamlessly integrated mobile strategy heading into the holidays. With mobile transactions on the rise and more consumers using smartphones to shop, this strategy could significantly boost holiday sales for Wal-Mart. However, overall Target appears to have the best promotional offerings thanks to exclusive product offerings, free shipping with no purchase limit, and a generous gift-card policy. For this reason, I suspect Target will close out the 2015 holiday shopping season on top.
As it stands, Target's stock is trading around $74 a pop and appears reasonably priced, with a price-to-earnings growth ratio of 1.72, in line with the broader retail industry. Shares of Wal-Mart are trading around $56 apiece today. That may seem cheaper than Target's stock on the surface, although a closer look reveals that Wal-Mart trades at 5.77 times earnings growth -- giving it one of the highest PEG ratios in the retail industry today. As a result, Target is the clear winner for investors' portfolios ahead of the all-important holiday season.
Tamara Rutter owns shares of Amazon.com and Target. The Motley Fool owns shares of and recommends Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.