Target vs Walmart | The Beast from Bentonville | 2

0:08December 1992, Walmart head office, Bentonville, Arkansas. CEO David Glass enters the company film studio. He's a stiff man with graying hair and thick sloping black eyebrows that set his face into a permanent scowl. But today, he wants to charm. He smiles and shakes hands with a reporter from NBC's television news show Dateline. It's been eight months since Walmart founder Sam Walton died, and Glass has big boots to fill. Walton died a hero to millions of low-income Americans. His stores made their stretched budgets stretch further, and they loved him for it. He was America's richest man, but his rustic manner made him seem just like his customers.

0:56Glass lacks Walton's easy charm, and more people are questioning Walmart's friendly image now that it's become America's top retailer. So, encouraged by Walmart's publicists, he's been sweet-talking the media and getting glowing tributes in return. He expects today will be more of the same. And it is. Right up until the interview takes an unexpected turn. The reporter turns to the TV and video player by his side. The videotape of what NBC uncovered in Bangladesh is already loaded. I want to show you something. Sure. This is a factory full of children. And they're making sure it's for Walmart. Glass glances at Walmart publicity chief Don Schinkel, who's standing just off camera.

1:48But Schinkel isn't sure what to do. Glass has fallen into a trap and seems unable to talk his way out of it. Schinkel considers intervening, but that would look terrible. So he holds back as Glass replies. To my knowledge, we don't buy from any vendor that uses child labor. NBC's reporter hands Glass a folder. Inside are photographs of dead children. Children who died from smoke inhalation during a fire at the Bangladeshi factory that now produces Walmart shirts. Glass shakes his head as he examines the photos. The children who work in this plant are locked in until all hours of the night, until they finish that day's production.

2:34There are tragic things that happen all over the world.

2:41That's all you want to say about it? Schenkel lurches forward. I don't know what else I would say about it. Too late to stop Glass replying. Schenkel steps in. We're done. Any more questions, put them in writing. Walmart's team quickly turn up the lights and ruin the footage of Glass storming off. NBC's expose airs just before Christmas, and people keep shopping at Walmart anyway. But while the footage from Bangladesh doesn't hurt sales, it does leave stains on Walmart's image that won't come out. Eight months ago, Sam Walton could have said, aw shucks, and all would have been forgotten. But he's gone.

3:25Now, Walmart's just another big corporation. And Target's about to exploit that. To the max.

3:38Mom and Dad. Mom and Mom. Dad and Dad. Whatever. Parents. Are you about to spend five hours in the car with your beloved kids this holiday season? Driving to old Granny's house? I'm setting the scene. I'm picturing screaming, fighting. Back-to-back hours of the K-pop Demon Hunter soundtrack on repeat. Well, when your ears start to bleed, I have the perfect thing to keep you from rolling out of that moving vehicle. Something for the whole family. He's filled with laughs. He's filled with rage. The OG Green Grump. Give it up for me, James Austin Johnson, as The Grinch. And like any insufferable influencer these days, I'm bringing my crew of lesser talented friends along for the ride with A-list guests like Grump, Mark Hamill, and the Jonas Brothers, whoever they are.

4:23There's a little bit of something for everyone. Listen to Tis the Grinch Holiday Podcast wherever you get your podcasts. In just a few years, Ozempic has gone from a diabetes drug to a global phenomenon, But as demand explodes, squeezing supply, counterfeit versions are flooding the market. I'm David Brown, host of Business Wars, and in our newest season, we dive into the high-stakes race to supply the world's hottest weight loss drug. Make sure to listen to Business Wars on the Wondery app or wherever you get your podcasts.

4:53From Wondery, I'm David Brown, and this is Business Wars.

5:20On the last episode, Walmart conquered small-town America and rose to the top of the retail rankings, while Target channeled Disney's approach to service to charm the city suburbs. Now, after years of staying out of each other's turf, the race to expand is bringing them into conflict. But with Walmart already three times bigger, Target needs a vulnerability to exploit. And fast. This is Episode 2, The Beast from Bentonville.

6:00Early 1993, the Walmart in Cedar Rapids, Iowa. At the front of the store, an elderly Walmart greeter bends down to place a sticker of a yellow smiley face on a little girl's coat. There you go now. Can I get a high five? No? You sure now? Okay then. Bye-bye now. As the little girl and her mom leave, The greeter waits for more incoming shoppers. Greeters like him welcome shoppers at every Walmart, but they're not just there to lift spirits. They're also a shoplifting deterrent. Seems they make people feel guilty about stealing. The greeter waves as a clean-cut couple push a cart through the doors.

6:42Morning, folks. You come far today? The couple look startled and smile back. No, not far. But that's a lie. This couple isn't local, and they're not here to shop. They're not even a couple. They're actually Target employees on reconnaissance. The greeter smiles. Good for you. Have a great day. Relieved that he was just being over-friendly, the undercover Target duo get to work. They roam the aisles methodically, seeking out every price comparison sign in store. The man frowns as he inspects a pack of baby wipes. Walmart's signs claim that this pack costs 75 cents more at Target, even though they're comparing items of different sizes.

7:31We won't even sell diaper-ins in this size. Just put it in the cart. Don't draw attention. Walmart's been making inaccurate price comparisons in its stores for months. At first, Target thought it was just a few isolated mistakes. But it keeps happening. And many of the comparisons aren't even like for like. So now, Target's gathering intel for a counter-strike.

8:02March 1993. Walmart head office, Bentonville. In his corner office, CEO David Glass grits his teeth as he reads Target's latest newspaper ads. The headline reads, This never would have happened if Sam Walton was alive. Glass turns to Walmart publicity chief Don Schenkel. Where are these ads running? In six states, but newspapers are also writing about the ads, so the reach is broader. Targets also complain to the Better Business Bureau. Glass continues reading the ad. It hails Walton as a fierce but honest opponent. Then, it accuses Walmart's current leadership of betraying his values. Glass's perma-scow deepens.

8:49Targets using Walton's image against Walmart. And for Glass, that's personal. Walton was his pal, and the first anniversary of his death is just two weeks away. This is low and dirty. How dare they use Sam like that? This can't go unanswered. I want ads in the same newspapers. Take this down as a jumping-off point. Schenkel grabs his pen and takes notes as Glass dictates. For Target to say we cheat is an affront to all Walmart associates. Target reminds us that it was only a year ago that we lost someone we loved very dearly. What Sam stood for is alive and well. and clearly that makes Target nervous.

9:40I got that? Schenkel nods. But by the time Walmart's counter-ads appear, other rivals are joining the attack. Discount chain Meyer complains to Michigan's Attorney General about Walmart's misleading price comparisons. After the Attorney General threatens to sue, Walmart settles quickly and promises to change. Soon after, the Better Business Bureau backs Target and gets Walmart to stop putting price comparison signs in its stores. But Walmart's got bigger things on its mind. Glass wants to turbocharge Walmart's growth, and he's borrowing billions to do it. He's ordered its new international division to go from nothing to sales of$10 billion a year in just five years.

10:33He also wants new Walmarts opening at home faster than ever, especially in the northeastern states. The Northeast is the only part of the continental USA that hasn't yet been saturated with big box discount stores. And there's big money there. The Northeast has the highest concentration of above average earners of any region in the U.S. But Walmart's push into Yankee territory is sparking plenty of pushback.

11:05September 1994, Bentonville. In the parking lot of Walmart headquarters, Carol Goodwin, a mother of six, opens the trunk of her car and retrieves a wooden basket covered with a checkered dish towel. She shuts the trunk and looks at Walmart's squat red brick home office. She's 1 ,500 miles from her home in Sturbridge, Massachusetts and about to duel with America's biggest retailer. Ten minutes later, Goodwin's in a room with Walmart publicist Don Schinkel. She removes the dish towel covering the wooden basket. Inside, there's a bottle of maple syrup, some candies, a cookie cutter, and a few candles.

11:50These are gifts from us to Walmart. Everything's made in Stirbridge, even the basket. Schinkel expected a more combative start from the woman leading the campaign to keep Walmart out of Sturbridge. Well, thank you. It's very kind of you to think of us and bring these gifts. Every store these gifts are from will be at risk if Walmart opens in our town. I don't think that's true. Sturbridge has lots of gift stores, but very few places for general shopping. There's already a Walmart 11 miles east of our town. Why invade our town, too? We don't invade anywhere. We bring jobs and help people make ends meet.

12:33If Sturbridge is to thrive, it cannot be a museum. Sure, but isn't it for the people of Sturbridge to decide what happens in their town? Last month, the town voted 6-1 against your store. Schenkel knows all about that vote. That was a non-binding vote of 700 people. There are 8 ,000 people in Sturbridge. Those who voted against our store don't represent everyone in the town. Goodwin gets a book from her handbag. On the cover is a photograph of Sam Walton wearing a Walmart baseball cap. You know, on the way here, I read Sam Walton's book. He sounded like a good man. He was. One thing he wrote really stayed with me.

13:19Uh-huh. Goodwin finds the passage she underlined. If some community, for whatever reason, doesn't want us in there, we aren't interested in going in and creating a fuss. You know, I think if Sam Walton was alive today, he'd be on Sturbridge's side. Well, we'll have to disagree on that. But rest assured, I have heard your concerns, and I will brief our CEO, David Glass, on our meeting. Goodwin stares at Schenkel. You're not going to stop, are you? Like I said, I will brief Mr. Glass. You have my word. Thank you again for the gifts. They shake hands. But they both know this fight isn't over. And Sturbridge isn't alone.

14:07Across the Northeast, local people are banding together to stop Walmart's advance. Some fall swiftly, but others entangle the retailer in red tape and lawsuits. Walmart usually triumphs, but instead of storming into the Northeast, it must now grind its way forward. And that gives Target time to catch up.

14:39April 1996, Mason City, Iowa. In a brand-new Target the size of three football fields, the store manager strolls the aisles, feeling proud. Her store is the chain's fourth super target, and it's already ringing up big numbers. That's because this enormous superstore sells food. The manager checks the red shopping cart of a passing customer. Inside the cart, bread and milk sit alongside more standard Target fare, like shirts and batteries. The manager smiles at the site. That customer's cart is exactly what SuperTargets are all about. On average, people shop at big-box discount stores once a month, but visit supermarkets at least once a week.

15:25So Target's using groceries to get people to visit more. The plan is they'll come for the food and then buy clothes and other goods. And since there's much more money to be made from selling general items than groceries, Target can undercut supermarkets and still increase profits. Most supermarkets also face higher labor costs because they're unionized, and Target's not. The manager enters the grocery section. He takes up around a third of the store and sells everything a supermarket would. But the moment she passes the bakery counter, she sees something that stops her in her tracks. There's a bunch of men in suits at the deli counter, and among them is a familiar, grumpy-looking guy.

16:11As she gawks at the sight, one of her team approaches. You still want me to help with the delivery? Hey, you see that guy over there? You know who that is, right? The employee squints at the guy, who's now taking a lot of interest in the Asian food counter. Um, I'm not sure. Is he on TV? It's David Glass. The employee gives her a blank look. The boss of Walmart? Oh. Why is he shopping at Target? He's not shopping. He's checking us out. Walmart must be worried by what we're doing.

16:53But while Walmart's paying close attention to the new super targets, it's not worried yet. And that's because Walmart started the superstore trend. Walmart imported the idea from France and opened its first supercenter nearly a decade ago. Now it's got 250 supercenters selling general goods and groceries and delivering billions in annual sales. Glass eventually wants every Walmart to become a supercenter. But while Walmart built supercenters, Target sat by. It felt food was outside its expertise. Only now has it realized that to stay competitive, it needs to sell food too. But there is one battleground where Target still got a shot at catching up with Walmart.

17:47The Northeast. But to win there, it's got to prove that it's a cut above other big box stores.

17:59In just a few years, Ozempic has gone from a diabetes drug to a global phenomenon. But behind the miracle claims, another battle is raging. Demand is exploding, supply can't keep up, and as drugmaker Novo Nordisk scrambles to produce more, its rival Eli Lilly is racing to take the crown. Meanwhile, a darker market is emerging. Shady online sellers are offering cheap, unregulated knockoffs. Now millions are injecting mystery vials with no FDA oversight. I'm David Brown, host of Business Wars. In our latest season, we're diving into the race to Ozempic and the billion-dollar showdown between Big Pharma's biggest players.

18:38Can they close the supply gap before one bad vial destroys everything? Make sure to follow Business Wars on the Wondery app or wherever you get your podcasts. You can binge all episodes of Business Wars early and ad-free right now on Wondery+. I'm Indra Varma, and in the latest season of The Spy Who, we open the file on Oleg Gordievsky, the spy who outran the KGB. A rising star in the heart of Soviet power, Gordievsky is secretly feeding MI6, the Kremlin's deadliest secrets. For 11 years, he walked a razor's edge, exposing KGB threats that hastened the Cold War's end and helped prevent nuclear annihilation.

19:24But the KGB have a mole of their own. When they discover the truth, Gordievsky's world collapses. MI6 hatch a desperate, high-stakes plan to smuggle him out of Moscow. An escape that could rewrite history. Follow The Spy Who on the Wondery app or wherever you listen to podcasts. Or you can binge the full season of The Spy Who Outran the KGB early and ad-free with Wondery+.

20:07December 1996, Manhattan. In the offices of ad agency Kirshenbaum Bond and Partners, Target's dapper marketing chief, John Pellegrin, stares at the advertisement in front of him. The only image is Target's bullseye logo, a red dot surrounded by a circle. Below it are the words, If you know what this symbol means, call this number. Pellegrine looks at the agency's creative director, Bill Oberlander. It doesn't even mention Target. Oberlander nods. Well, here's the thing. New Yorkers are obsessed about being in the know, and the people here come from all over. Many will know Target. This ad will put them in the know and make those who don't know Target want to know.

20:54Pellegrin isn't sure. Target's about to open a store in Edison, New Jersey, and it wants to leverage that store's proximity to New York to launch its brand in the Northeast. And Target can't afford to mess this up. Walmart's Northeastern advance is bogged down in battles with communities that see it as a corporate beast that hollows out downtowns, pays poorly, and blights the landscape. If Target gets this launch right, maybe it could convince Yankee shoppers to see it as friend, not foe. But this cryptic ad is well outside Pellegrin's comfort zone. Like every other discount chain, Target's ads usually trumpet low prices.

21:38To Pellegrin's knowledge, no discount chain's ever run a pure branding campaign before. He looks at Oberlander. Can't we at least mention that the new store is in Edison? Absolutely not. It's in New Jersey. For some New Yorkers, that may as well be Idaho. We have to sell this as the New York area grand opening. Pellegrin relents. Fine. But if there's not 5 ,000 people in that store on opening day, you guys are toast. But the campaign delivers. Within an hour, 2 ,000 New Yorkers call the number on the ad. The Edison store quickly becomes one of Target's top performers. And the buzz about Target spreads fast across the Northeast.

22:27But Target's still missing something. It's got Disney-inspired service, wide, uncluttered aisles, and customers that, on average, earn$10 ,000 more a year than Walmart shoppers. But to really stand apart, it needs to be more than a tidier Walmart. It needs something Walmart and other discounters lack. Style.

22:571997, Target headquarters, Minneapolis. In the dining room, Target's executives are treating Michael Graves to lunch. He's a 62-year-old architect and designer with thinning gray hair. His resume includes Disney World hotels and$140 Alessi tea kettles. But his latest gig is to design the scaffolding for the Washington Monuments restoration. And since Target's writing the checks for his scaffolding, he's come to brief its executives on the project. But Target Vice President Ron Johnson's got a different project on his mind. Michael, this might be a curveball, but would you ever consider designing a collection for us?

23:40We've been knocking off your designs for 15 years. Suppose it's about time we went to the source. I'm thinking a collection that includes everything from telephones to toilet brushes, all at target prices. Grave's mouth curls into a hard-to-read smile. He knows Kmart sells Martha Stewart homeware and Walmart stocks morning TV star Kathy Lee Gifford's clothes. But he's no celebrity. I'm flattered, but I doubt your customers know who I am. We don't want a celebrity. Our competitors do that, and we don't want to do what they do. We want to work with real designers to democratize good design. Graves sits forward.

24:24Ah, interesting. The modernist and Bauhaus movements dreamed of bringing great design to the masses. I do too. Johnson leans forward. Target's executives want a new song to sing. For decades, discount stores have fought each other on price. But Walmart's buying power means the Arkansas giant always has the edge. So they want to switch things up and start selling upscale products at everyday prices. But most elite designers don't want to risk their cred by working with discount stores. Really? You're open to working with us? Why not? Taste is no longer just for the elites. It's trending downwards.

25:08So, how would this work? Well, we'd typically order 80 ,000 units of each product in the collection and order more of any item that sells. Your cut per sale won't be huge, but given the volume of product we sell, the money would still be significant. Graves' face brightens. But then his smile droops. Something wrong? I have a confession. I've never set foot in a Target. Oh. Okay. Well, I'll arrange a tour. You could even use it to pick out what products you'd like to include in your collection. How about that? Well, you know, I want to make a toaster. All toasters are the same, boring boxes. I want a toaster that makes me smile at 7.30 a.m.

26:03But yes, a tour would be perfect. I could put yellow post-its on anything I find ugly. Michael, there aren't enough post-its in the world for that.

26:15Target and Graves spend months finding ways to deliver his designs at rock-bottom prices by using cheaper materials and manufacturing methods. And in January 1999, Target's Michael Graves Design Collection goes on sale. The collection spans 300 items. There are pop art toasters and whimsical alarm clocks, translucent ice buckets and stylish spatulas, There's even a version of the stainless steel tea kettle Graves made for a lessee. But instead of$140, this one costs$39.99. The Graves collection disrupts the discount scene. For years, discount stores have been seen as down market. Now, Target's selling goods that are both cheap and chic.