Target\u2019s\u00a0weak quarterly earnings\u00a0underscored why it cut prices on thousands of household staples: it\u2019s struggling to win over bargain hunters.<\/p>\n
The discounter is not alone.<\/p>\n
Target\u2019s first-quarter results\u00a0on Wednesday not only show American consumers are more selective about spending after sustained inflation squeezed their budgets for nearly three years.\u00a0<\/strong>The company\u2019s declining sales also illustrate how the battle for shoppers\u2019 wallets has heated up as retailers \u2014 and even some restaurants \u2014 race to outmatch each other on low prices.<\/p>\n Walmart\u00a0said last week that its grocery \u201crollbacks,\u201d short-term deals on specific items, were up 45% year over year in April. The discounter also introduced a new premium grocery brand with\u00a0most items under $5. Earlier this month, Aldi dropped prices on more than 250 items, including chicken, steak, granola bars, and frozen blueberries. And even\u00a0McDonald\u2019s\u00a0is debuting a limited-time\u00a0$5 value meal\u00a0in late June as some diners scoff at the price of fast food.<\/p>\n Target\u00a0made its move\u00a0on Monday, saying it has already reduced prices on about 1,500 items and plans to cut prices on thousands more this summer. Many of those cheaper items are staples, such as milk, peanut butter and diapers.<\/p>\n Multiple major grocers and restaurants cutting prices or offering deals could offer relief to consumers, at a time when\u00a0consumer prices are still climbing\u00a0more than 3% from last year. It could also give the Federal Reserve more confidence to cut interest rates.\u00a0<\/strong>Even so, the revenue lost from lower prices could force businesses to cut back elsewhere \u2014 potentially on labor costs.<\/p>\n Analysts on Target\u2019s earnings call on Wednesday asked about the timing and reasoning behind the price cuts and whether Target or its vendors are picking up the tab. The company declined to share details of that split, but Chief Growth Officer Christina Hennington said Target\u2019s vendors know the company is committed to passing on savings to its customers to drive traffic.<\/p>\n Some businesses have held on to customers even with the same or higher prices: Chipotle and Sweetgreen, for example, have\u00a0bucked the consumer slowdown.<\/p>\n Target\u2019s results on Wednesday revealed at least part of the reason why it is joining the race to cut prices. Sales of discretionary merchandise, such as clothing, dropped year over year. But so did sales of higher frequency items like groceries and paper towels.<\/p>\n Some customers may be making those purchases at Walmart instead. Transactions on Walmart\u2019s website and stores rose 3.8% in the most recent quarter, and its e-commerce purchases shot up by 22% in the U.S., the company\u00a0reported last week.<\/p>\n In an interview with CNBC, Walmart CFO John David Rainey said the company is\u00a0gaining share from higher-income households. He added some consumers are\u00a0coming to its stores for meals\u00a0because of sticker shock at fast food chains.<\/p>\n \u201cWe\u2019ve got customers that are coming to us more frequently than they have before and newer customers that we haven\u2019t traditionally had,\u201d he said.<\/p>\n On Target\u2019s earnings call, analysts asked tough questions about whether the retailer is losing ground with shoppers or is seen as too pricey, outside of sales events.<\/p>\n CEO Brian Cornell said Target is putting value front and center as it fights to get back to growth.<\/p>\n \u201cWe want to make sure\u00a0America\u00a0knows that Target\u2019s a great place to shop and we have great value every time you engage whether it\u2019s in-store or through our digital channels,\u201d he said, adding that the company is on track to reverse sales declines in the second quarter.<\/p>\n When Target cuts prices, customers have noticed and responded, Hennington said on the earning call. For example, it noticed it didn\u2019t have low-priced tech accessories that customers wanted, such as charging cables and phone cases, she said.<\/p>\n Those items became part of Dealworthy, a new private brand launched in February that offers Target\u2019s lowest prices on basic items like laundry detergent and paper plates.<\/p>\n \u201cWhen we introduced the right price points in Dealworthy, the guests noticed immediately and that drove unit and traffic acceleration in those categories and that\u2019s what we\u2019re doing business by business,\u201d she said.<\/p>\n It\u2019ll soon run a similar play with seasonal items, she said.<\/p>\n After Target \u201ctook a hard look at some of the most popular products from last year\u2019s summer assortment,\u201d customers can expect to see cheaper pool noodles, floats and coolers.<\/p>\n \u2014 CNBC\u2019s Amelia Lucas contributed to this report.<\/em><\/p>\n<\/p>\n Target\u2019s\u00a0weak quarterly earnings\u00a0underscored why it cut prices on thousands of household staples: it\u2019s struggling to win over bargain hunters. The discounter is not alone. Target\u2019s first-quarter results\u00a0on Wednesday not only show American consumers are more selective about spending after sustained inflation squeezed their budgets for nearly three years.\u00a0The company\u2019s declining sales also illustrate how the […]<\/p>\n","protected":false},"author":0,"featured_media":4806,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-4805","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4805","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=4805"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/4805\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/4806"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=4805"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=4805"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=4805"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}