Target Takes the Lead as Labels' Favorite Big Box (From the Magazine)

This article is an excerpt from 'Maximum Exposure,' our comprehensive list of the 120 best places for music to be discovered by consumers -- from Super Bowls to Amazon Daily Deals -- which was the centerpiece of our most recent issue. To receive Billboard's gold-standard music industry reportage every week, subscribe right here.

While Walmart may still sell more music, in the eyes of record label executives Target’s marketing prowess has helped the Minneapolis-based merchant pull neck and neck with the Bentonville, Ark.-based discount store operation.

The Target circular reaches 50 million homes and generates 100 million impressions, but the most important aspect of getting an album cover into the circular means that it’s a priority at the chain’s stores and will be placed on either an endcap or a fixture near the checkout lane.

Album placement in the checkout lane of every Target store can be a huge advantage, one label executive says. Another points out, “Target still has a very aggressive music stance. When they focus on an artist, they win big for that artist. They are good at leveraging media and tilting their very powerful brand behind specific artist releases.”

THIS ARTICLE FIRST APPEARED IN BILLBOARD MAGAZINEGET THIS WEEK'S ISSUESUBSCRIBE TO BILLBOARD HEREIPAD EDITION

“The Walmart endcap was such a powerful destination,” a major-label sales executive says. “But the Target new-release endcap has become an even more powerful sales tool in the last 18 months. I would say now that the Target and Walmart endcaps are pretty even.”

Meanwhile, the Target circular continues to have a halo effect, driving sales at other stores and for digital merchants, label executives say. Also, because Target’s circular plays up music more prominently than the Best Buy circular, it has displaced the electronic retailer’s circular as the No. 1 print vehicle that labels like to have. “Times have changed,” says the head of sales at a major label. “There is no question, the Target circular will give the bigger lift. The Best Buy circular and the Walmart circular, which is not published regularly, are not in the same league.”

While both merchants are margin-focused, Walmart has a tendency to fight for the lowest price possible for its customers while leaving a healthy profit margin for itself. But Target searches for the right value proposition with each offering. That means that when music is merchandised with extras, be that with tracks or with other products, Target will price it accordingly at a higher price.

The other difference between the two discount chains is Target’s music offering tends to outperform with artists who have a big female audience, while Walmart stores tend to sell more rock and country music.

Recently, Walmart has been merchandising music from marquee acts in or near the grocery department. The chain also allows labels to place music in other departments through product association, but that can be a difficult sell to certain artists.

“If you can get a product endorsement and get your artist’s album on a beer endcap or in a grocery fixture, it can be really big,” one label executive says. “Walmart knows that getting music into the grocery department can be a powerful sales tool, but the space there is so competitive that you need a strong offering for them to create the place for merchandising,” say a beer product, with music, and the music price has to be discounted.

Best Buy remains a force to be reckoned with when it comest to rap and rock records. Best Buy outsold Target by a few hundred units on the new Eminem album, selling almost 96,000 units in its debut week versus the slightly more than 95,000 units that Target scanned during the week, according to sources.

Subscribe to Billboard