By Lisa Eadicicco, CNN

New York (CNN) — Between the Covid-19 pandemic, decades-high inflation and unprecedented tariffs, it’s been a tumultuous half-decade for retailers.

Some major chains have done a better job at navigating those challenges than others, a point that Walmart and Target underscored in their quarterly earnings this week. Walmart reported that sales jumped by 4.8% at its US stores that were open for at least a year, although it fell short of profit expectations. Meanwhile, Target saw sales fall for the third straight quarter on top of a CEO shakeup.

Target and Walmart are among the largest department stores in the US, but the latter has surged ahead in the big-box competition. Target’s troubles are the result of years of missteps, from overstocking on home-centric items during the pandemic to walking back its diversity, equity and inclusion initiatives earlier this year.

In contrast, Walmart has better positioned itself over the last decade to compete with the places people shop online, from Amazon to TikTok. That’s crucial considering e-commerce sales are growing faster than in-store sales, even though more money is still being spent in physical retail stores, according to a report from Capital One Shopping Research.

Walmart “can essentially get to 95% of the country in three hours or less and sell product to the consumer at the same price as you would pay if you were in their stores,” Bradley Thomas, managing director for consumer and retail hardlines at KeyBanc Capital Markets, said in an interview with CNN.

Walmart’s larger footprint and focus on affordable staples like groceries also make it a more appealing option for shoppers.

“It’s not easy to all of a sudden have half your store be grocery, and it’s not going to happen overnight,” Brad Jashinsky, an analyst covering retail at market research firm Gartner, told CNN. “And so part of this is Amazon and Walmart have executed really well, and Target has stumbled in certain areas.”

“It’s really tough for any retailer to compete with Walmart right now on price and increasingly on selection,” Thomas said.

The online gap between Walmart and Target

The digital divide has grown between the two retailers: Walmart’s global e-commerce business grew by 25% in its fiscal second quarter, while Target’s comparable digital sales grew by 4.3% in roughly the same time period, according to the companies’ earnings reports this week.

Although Amazon leads e-commerce sales in the United States by a wide margin, accounting for 40.6% of sales, Walmart comes in second with 9.4%, according to market research firm eMarketer. Target only accounts for 1.6%, coming behind the Home Depot, Temu, eBay and Apple, in addition to Walmart and Amazon.

Walmart’s Plus membership program and its focus on speeding up delivery times has driven its e-commerce sales, analysts say. But it also comes down to fundamental differences in Walmart and Target’s businesses. Walmart excels in everyday essentials, such as groceries and other household must-haves – the types of products people are likely to order with the press of a button on a regular basis.

“They’re really killing it in online grocery,” Sky Canaves, principal analyst for retail and e-commerce at eMarketer, told CNN in reference to Walmart. “That’s made Amazon, for one, sit up and take notice.”

Target, meanwhile, has a bigger focus on discretionary merchandise, like those offered through its private label brands across apparel, accessories and other categories. That’s a challenge for Target at a time when consumers are concerned about grocery costs and skipping discretionary purchases, according to analysts.

CNN has reached out to Target for comment.

But it’s not just about consumer spending. Some analysts say it’s hard to communicate the value behind Target’s signature brands online. E-commerce purchases are usually more transactional with no opportunities for customers to touch the products or view in-store displays, said Canaves and Thomas.

“Trying to convey that like treasure hunt, or fun in-store experience, doesn’t translate as well online,” Canaves said. “… The whole concept of the Target run is an in-store experience.”

Walmart takes a page from TikTok and Amazon

Social media has become critical in the e-commerce business. Three in 10 US adults who use TikTok have purchased something from the social media platform’s shop over the past 12 months, according to a YouGov survey released in May.

Walmart partnered with TikTok to deliver in-feed ads in 2022, giving the retailer a bigger presence on what is increasingly becoming a digital shopping platform. The retailer also has an affiliate program that allows content creators to earn commissions by posting about the store’s products on their social channels.

Target made a social media push with a similar affiliate program, and it also has its own media business, called Roundel, for developing and distributing ads across online platforms. But the company has been grappling with boycotts and other backlash when it rolled back its DEI initiatives in January, after the company had previously made those diversity efforts part of its identity to consumers.

“There’s a perception that Target is not that cool anymore,” said Canaves. “And part of it has to do with the with the DEI shifts that it’s made.”

Walmart is also following in Amazon’s footsteps by growing its third-party seller platform, a move that broadens the variety of products it offers to consumers. And it’s scaling that marketplace much faster than Target, according to e-commerce intelligence firm Marketplace Pulse.

Last October, Target’s third-party seller platform, called Target Plus, had just 1,325 sellers, according to Marketplace Pulse. The e-commerce research firm reported that Walmart’s marketplace had more than 200,000 active sellers as of June 2025. Unlike Walmart, Target’s platform is invite-only.

“Amazon is still the 900-pound, 800-pound gorilla of retail marketplaces,” said Jashinsky. “Walmart, although they’re growing, is still significantly smaller than Amazon’s marketplace business. But they’ve grown tremendously.”

Overall, the problem may not be so much Target’s missteps, but the notion that its rivals are ahead of the curve.

“Target certainly is not sitting still, and I think overall, they’re doing a pretty good job,” said Thomas. “The problem is that their competitors, namely Walmart and Amazon, are just doing a much better job right now.”

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CNN’s Nathaniel Meyersohn contributed to this report.