(Image Source: CCG, Inc.)
Amidst the pandemic-induced pressure on the global supply chain, many retailers find themselves being unable to stock up their shelves. Unlike many of their competitors, Walmart and Target have decided against raising prices “to compensate for higher supply-chain related costs and pre-inventory purchases”. Despite the overnight stock sell-off in the aftermath of the aforementioned announcement, the two big retailers are adamant about prioritizing long-term customer loyalty over short-term profits.
“We want to keep prices low for customers all across the business, and we’ll be the last to go up….We see gaps that are wider now than they were before the pandemic began, and we intend to maintain that position,” says John Furner, CEO and President at Walmart. Target’s CEO and Board Chairman Brian Cornell also shared similar views. He even mentioned in his statement that they “expect to be a company that’s growing the top line and gaining share over time.”
The good news is that both Target and Walmart’s stocks have bounced right back as of November 30 following their temporary lows. It appears that investors were not that against the loyalty-driven approach after all. As a matter of fact, customer loyalty has the potential to create investor valuation in the long run. According to Business Consultant Susan Trivers, the companies have “made the right choice for customers, growth and investors.”