Target's biggest problem isn't a customer boycott

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Target is losing customers to Walmart and Amazon, according to new research.

The retailer recently revealed that shopper traffic is declining for the first time in years.

The decline immediately followed the start of a boycott against Target for its policy welcoming transgender customers to use any bathroom or fitting room that matches their gender identity.

But Cowen & Co. analysts say the real reason shoppers are abandoning Target is because they can find better prices and more convenience elsewhere.

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According to the analysts, Target is losing the business of shoppers who visited the retailer for "fill-in" trips — or quick stops to get a small amount of items between larger "stock-up" trips.

Shoppers are cutting down on these "fill-in" trips to Target because they are finding cheaper prices at Walmart and more convenience with Amazon Prime, according to data compiled by Cowen & Co.

"Amazon is seeing explosive growth in several categories most notably grocery and consumables, which accounts for 45-50% of Target's business and are likely the categories feeling pressure from the 'fill-in' trip dynamics," the analysts wrote in a research note published Monday. "In our view, Walmart can use its scale to compete on price to regain or maintain market share vs. Amazon... but Target cannot compete as easily."

target shoppingAssociated PressTarget's same-store transactions, which is how traffic is measured, fell 2.2% in the second quarter. Overall, sales fell 7.2% to $16.2 billion.

"In the second quarter, our No. 1 challenge was traffic, which affected sales in all of our merchandise categories," Target CEO Brian Cornell said last week on a call with analysts.

Target is planning to overhaul its grocery department to better compete with its rivals, but analysts say the changes will take too long to accomplish.

RELATED: 7 items you should always buy at Target

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7 items you should always buy at Target
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7 items you should always buy at Target

1. Toys

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2. Kids' Bedding

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3. Video Games

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4. Makeup and Cosmetics

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5. Picture frames

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6. Household essentials

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7. Groceries

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"The food section is facing increasing competition from Walmart's price investments as well as added convenience features at some competitors, such as online grocery pickup and expanded service offerings."

Walmart, Kroger, Harris Teeter, Giant Food, and other chains have started offering online grocery pickup, meaning customers can order their groceries online and pick them up at a nearby store.

Analysts said Target will have to drop prices in its grocery department to stop losing customers to Walmart.

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How to save money at Target:

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Ways to save money at Target
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Ways to save money at Target

Look at what number price of an item ends in
It may seem overly attentive, but it's worth it. If the price of an item ends in $0.06 or $0.08, the item will be marked down again at some point in the future. If the price ends in $0.04, the item is marked for final clearance and the price will not change again.

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Trade in electronics for gift cards
If you bring your old electronics to the electronics department, they'll quote you on how much your stuff is worth and compensate you in Target gift cards to spend around the store.

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Be aware of the weekly markdown schedule
Different departments in Target mark down items depending on the day of the week:
Monday: Electronics, accessories, kids' clothing, books, baby, and stationery
Tuesday: Domestics, women's clothing, pets, and market 
Wednesday: Men's clothing, health and beauty, lawn and garden

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Thursday: Housewares, lingerie, shoes, toys, sporting goods, decor, and luggage
Friday: Auto, cosmetics, hardware, and jewelry

Strategically utilize holiday clearance sales
Target has consistently scaled markdowns on themed items after the holidays:
Day after holiday: 50% off
Three days after holiday: 75% off
One week after holiday: 90% off

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Sign up for mobile coupon alerts
By signing up, a new set of coupons will be sent to your phone each month (you can even specify the exact time you want them delivered.) The coupons are scannable and can be redeemed at the register. 

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Shop the end caps
The end caps are the shelves that sit at the end of each aisle, seeming somewhat misplaced. However, most clearance items are usually placed here--make it your go-to place to check if you're looking for discounted items.

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Check online for current deals  
Each week, Target updates its current promotions and weekly sales pages--you'll be able to scout out deals you want to take advantage of and know how much you can save before you even get in to store.

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BYOB (bring your own bag)
Target offers a five-cent discount for every reusable bag you bring in to use at checkout. Every cent adds up!

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Opt for store-brand items
A general rule of thumb when shopping at any major retailer, but its especially worthwhile at Target. Target has several top-quality store-brands that produce everything from food to beauty products at a much lower price than name brands. 

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Hit the dollar section first
Target's dollar aisle is like no other--you never know what you can find when you really look! 

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Utilize "Target Cartwheel"
Cartwheel is a social coupon program that Target created that allows you to set up an account to earn and receive deals. You can use each deal up to four times, as well as stack your deals with other coupons. 

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See Also:

SEE ALSO: The Target boycott is costing more than anyone expected


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