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A couple of decades ago Zody’s and Gemco were the stores to shop at for household supplies, small appliances, and clothing apparel. Just as everything changes so does the retail industry. Zody’s and Gemco have been gone for sometime now, and have since been replaced with Target, and Wal-Mart Stores. Both stores have very unique trademarks Target is known for its red bulls eye, and Wal-Mart is known for the moving big yellow smiley face. What would make an investor select Target stock over Wal-Mart or vice versa? This paper shall explore the financial position of each organization.
The red bulls eye may have been just become affiliated with Target, but they were known long before the bulls eyes came into place. Target was founded by George Dayton in 1902. George Dayton opened a retail store in downtown Minneapolis. Originally known as the Dayton Dry Goods Company, it became the Dayton Company in 1910. In 1962, the Dayton Company became public and opened its first Target discount store in Roseville, Minnesota, a suburb north of St.
Paul. By 1979, it would be the company’s top revenue producer (target.com 2005).
However, when Zody’s and Gemco were in their prime there was a silent storm waiting. In 1945 Wal-Mart’s founder, Sam Walton, became manager of a Ben Franklin variety store franchise in Newport, Arkansas. He later moved to Bentonville, Arkansas, and in 1950 opened its first distribution center and home office in Bentonville (walmart. com, 2005). In 1972 the company was listed on the New York Stock Exchange (NYSE).
By operating its own warehouses, Wal-Mart could buy goods in large quantities and thus cut costs.
In addition, the company another Ben Franklin franchise that he called the Walton 5 ; 10. By 1962 he managed 15 Walton 5 ; 10s. That year, unable to convince the Ben Franklin Company to start a chain of stores that offered discounts all the time on all items, Sam and his brother James “Bud” Walton opened their own store, Wal-Mart Discount City, in Rogers, Arkansas. In 1969, operating 18 Wal-Mart Discount City stores (now called simply Wal-Marts) while still managing 15 Ben Franklin stores, Sam Walton incorporated the company as Wal-Mart Stores, Inc.
In 1970 the company sold its first stock to the public and built stores within a short drive of its warehouses and instituted an automated and computerized inventory and distribution system to stock its stores more quickly (walmart. com, 2005) The retail industry is starting to recognize the needs of today’s society. While Target and Wal-Mart both offer a selection of general merchandise, including apparel, electronics, health and beauty aids, toys, sporting goods, and household products.
Wal-Mart seems to have the idea on what to offer than just the traditional items found at retail stores, they offer a full-line supermarket and pharmcies within their stores. Wal-Mart has learned that killing two birds with one stone gives an upper-hand on the competiton. Target and Wal-Mart are in the retail industry. Retail is defined as, “to sell in small quantities directly to the ultimate consumer” (Merriam-Webster, 2005). Although other retail businesses like K-Mart exist in the retail industry, Wal-Mart is the number one retail chain in society today.
Wal-Mart surpasses other retail chains such as Home Depot and Lowe’s, which are also considered retail stores with a primary concentration in home improvement. The SIC (Standard Industrial Classification) system classifies companies and industries by their primary line of business. The US government developed this system in order to provide a standard method for collecting and analyzing economic information. The SIC codes are used to identify a company’s competitors and to locate industry financials and ratios (Cole, 2005).
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