Technology Will Help Target Boost Sales, but It Won't Solve Walmart's Problems

NEW YORK ( TheStreet.com) -- In their quest to better match the merchandise they sell to the shifting preferences of consumers, retail giants Walmart (WMT) and Target (TGT) have been doubling down on technology.

Both have improved their e-commerce offerings, introduced in-store apps to streamline operations, and promised to invest more than $1 billion in the coming quarters to shore up and improve their digital operations -- and grow profits.

But these similar new initiatives may result in very different outcomes for each company.

"Walmart has a people problem," says Paula Rosenblum, an analyst with Retail Systems Research. "Until now, there is no evidence that technology can help solve that problem."

Here's what The Street's Jim Cramer had to say about Target, which is the largest holding in his charitable trust, AAP:

I think that Target's e-commerce runs rings around Walmart and it was responsible for a very big part of their comp store gain. It was really the standout.

Want to be alerted before Jim Cramer buys or sells TGT? Learn more now.

By "people problem," Rosenblum is referring to issues around perceptions of Walmart as an exploitative employer, with demotivated employees and an uninspired product mix.

"Changing consumer perceptions is very difficult to do for a firm like Walmart, especially given how fast information flows with social media," says Kenneth Perkins, an analyst with Morningstar, a Chicago-based research consultancy.

According to Rosenblum, Target, which has battled website crashes and perception problems of its own, will have "more upside" with its technology initiatives because of its unique product mix and relatively stronger reputation among consumers.  

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