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Two days ahead of its Q1 earnings call, Target announced that it’s lowering prices for 5,000 “frequently shopped items across its assortment,” including milk, bread, diapers, and pet food. So far the retailer has lowered the “everyday regular prices” on 1,500 products and plans to cut thousands more over the summer.
"We know consumers are feeling pressured to make the most of their budget, and Target is here to help them save more," Rick Gomez, executive vice president and chief food, essentials and beauty officer at Target, said in a press release.
The cuts will apply to national brands across its food and beverage, health and beauty, and household essentials departments, as well as private-label brands such as Good & Gather and Everspring.
- As inflation has persisted and US consumers have started trading down, a handful of major retailers have announced price-cutting initiatives in the last six months. In April, craft supplier Michaels said it would mark down more than 5,000 items with discounts between 15% and 40%, and in December of last year, Ikea said it would lower prices on around 600 items.
Matt Pavich, senior director of strategy and innovation at Revionics, told Retail Brew that Target is focused on what are commonly referred to as key value indicators (KVI)—items that influence a customer’s perception of a retailer’s pricing vis a vis its competitors.
“Target's move to address price fatigue by cutting prices on 5,000 essential items is the latest evidence that prices are coming down in the categories consumers care about most,” he wrote in an email. “This is essential as endless consumer surveys and sales data show that consumers are unshakably looking for value.”
But price cutting is just one way Target is trying to stay competitive. The markdowns come as the company continues the roll-out of its new loyalty and membership program, Target Circle, which gives shoppers an extra 5% off their purchases. In addition, it recently expanded its low-priced private-label brand dealworthy and relaunched its everyday essentials brand up&up.
Target has struggled somewhat in recent quarters to sustain sales. Its Q4 2023 earnings showed comparable sales falling 4.4% from the previous quarter, and forecasted that full year 2024 sales would be flat or increase a modest 2%. The retailer has also invested more in growing alternative revenue streams. Notable examples include its membership program and in-house advertising business.