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Target vs Wal-Mart - Kindles vs iPhones Exclusives

How do two retail giants compete in a down economy when customers are still pressured by gas-price increases and high unemployment. They strike deals with electronic products associated with a lot of brand awareness. Both Target and Wal-Mart have first-time deals with devices that were exclusively sold through brand Web sites or retail outlets - namely Apple's iPhones and Amazon's Kindles.

According to Wall Street Journal report, Target has reported profits rising 29% for the quarter ending May 1, as it sales increased 5.5%. These results were in sharp contrast to Wal-Mart's less than stellar performance, which announced its fourth consecutive quarter of lower sales at its US stores.

Underpinning some of Target's success, the retailer's expansion of its electronic and video-game inventory grew by 30 percent. Coupled with that, Target recently struck a deal to become the first brick-and-mortar store to carry Amazon's Kindle e-Reader, which according to WSJ "flew off the shelves" during a 100-store test.

Acting a little more desperate, in anticipation of Apple lowering the price of older iPhone models when its much ballyhooed iPhone 4 hits the market, Wal-Mart is the front leader in slashing $100 off the iPhone 3GS - with the caveat you sign a two-year contract.

According to a Mashable report, the $100 price drop was announced in advance of Apple's WWDC conference where Steve Jobs is rumored to present the iPhone's next iteration, "unofficially dubbed iPhone 4." The iPhones cheapest model start selling today at Wal-Marts for $97.

The price reduction for the iPhone 3GS in Wal-Mart stores starts on May 25. A similar approach was offered by Walmart in 2009 when they lowered the price of the iPhone 3G to $99, when Apple launched the iPhone 3GS.

Both retailers gain a tremendous amount of publicity and free advertising with alliance deals of this magnitude. On the flip side, I don't know if Kindle and iPhone going mainstream hurts or helps the brands. But in today's fierce competitive climate, I think we will see more brand exclusive partnerships like this in the very foreseeable future.

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Ron Callari
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