Dive Brief:
- Target plans to cut prices on about 5,000 popular items across its assortment, the company said on Monday. The retailer said it has already reduced the prices of 1,500 items and more reductions will continue through the summer.
- The price cuts are centered on nondiscretionary grocery, household, and health and beauty items. Target said it “routinely adjusts its prices to ensure it is competitive within the markets it does business.” National labels and Target’s owned brands, like Good & Gather, will see price reductions.
- The initiative’s launch comes two days before Target’s Q1 earnings report and a week before Memorial Day, the traditional start to the U.S. summer vacation season. Target said the lowered everyday prices are in addition to separate Memorial Day discounts.
Dive Insight:
As consumers battle inflation, Target is lowering prices on thousands of essentials. The retailer plans to signal the price cuts with red tags in its app, in stores and online.
“We know consumers are feeling pressured to make the most of their budget, and Target is here to help them save more,” Rick Gomez, Target’s chief food, essentials and beauty officer, said in an announcement. “Our teams work hard to deliver great value every day, and these new lower prices across thousands of items will add up to additional big savings for the millions of consumers that shop Target each week for their everyday needs.”
Target has launched several initiatives this year to capture and retain consumer spending as inflation and economic uncertainty persist. In February, it added Dealworthy, a new low-priced private-label brand that expanded its assortment of low-cost everyday items.
In April, it introduced Target Circle 360, a loyalty program with paid membership tiers similar to offerings like Walmart+ and Amazon Prime. And earlier this month, Target added Daily Harvest, a DTC food brand, to its website and select stores.
“Target’s price reductions are a reaction to the fact consumers are hard pressed and are shopping around more for essentials and everyday grocery items,” Neil Saunders, managing director of GlobalData, told Retail Dive via email. “This has cost Target some volume as shoppers have migrated to value retailers like Walmart and Aldi.”
Other retailers have made similar moves in the last year. At Home cut prices on thousands of home goods items in its inventory last spring. In April, arts and craft retailer Michaels lowered prices on about 5,000 products. And one of Target's main rivals has done the same.
Walmart in April added Bettergoods, a new 300-item private-label grocery label, to its offering. Walmart touted that 70% of Bettergoods’ items are priced under $5. The retailer rolled back prices on about 7,000 items through the store, John Furner, CEO of Walmart U.S. said during a Q1 earnings call last week.
Saunders said Target’s price cuts help build a stronger value perception but “whether they will be enough remains to be seen” as retailers maneuver to stay one step ahead of each other in an uncertain economy.
“Target has a middle-of-the-road reputation on price when it comes to grocery, so even with lower prices on some items, consumers may still see it as a place for top-ups rather than as a place to do a full, great value grocery shop,” Saunders said.
