Do you think Target, which this morning reported another drop in sales, and other supermarkets are lowering grocery prices just to help you? Think again.
Target said Monday that it is lowering prices on 5,000 everyday products, from milk to diapers, as the big-box retailer looks to win customers from Walmart.
Earlier this month, supermarket Aldi said it was lowering prices on more than 250 items. Walmart has used its “rollback” promise this year to reduce prices and, like Kroger, has invested in improving its own-brand ranges.
“We know consumers feel pressure to make the most of their budget,” said Rick Gomez, Target’s food director, giving the impression that the company was simply helping customers. He echoed what the Aldi boss had said.
But the real reason is simply a matter of business. Now that the costs of some groceries are finally starting to fall after two years of harsh price hikes, supermarkets that are slow to move will lose customers, quickly.
That’s exactly what’s happening to Target. He announced this morning that his sales for the first three months of 2024 are lower than last year, which was his worst year in seven.
Target announced this week that it will reduce prices on 5,000 items.
Signs of price cuts at Target
Retail experts point out how sensitive American shoppers are to prices, especially when budgets are stretched to the limit.
That’s exactly why Target went to town by revealing its barrage of 5,000 price cuts, which it timed for a quiet Monday morning to make headline news.
Target’s revenue fell last year for the first time in seven years.
This morning, Wednesday, May 21, recorded another drop in sales for the first quarter of this year, after higher prices reduced shoppers’ spending.
Target has been losing customers to big rival Walmart, which last week boasted of increasing sales by four percent, a rare achievement among retailers’ recent set of earnings.
It made the jump in sales, and predicted the rest of 2024 would also be stellar, after getting ahead of the curve on price cuts, retail experts said.
Walmart has been talking about being cheaper than its rivals and has “widened the gap” on prices.
Assistant Professor of Economics, University of Wisconsin Andrew Stevens told local station WSAW-TV That lowering prices is often used as a marketing tool to outperform rivals.
“Consumers definitely notice when prices go up for something, and they tend not to notice when prices go down,” he said.
“So I think what we’re seeing is Target trying to attract attention and attract consumers to its stores and away from some of its competitors.”
Walmart said last week that it had seen its comparable sales increase nearly 4 percent during the first three months of the year.
Chief executive Doug McMillon spoke about how competitive prices at its 4,600 stores had attracted new customers.
“We have customers coming to us more frequently than before and newer customers that we haven’t traditionally had,” Walmart Chief Financial Officer John David Rainey told CNBC.
He said the company has increased “rollbacks,” which are price cuts on specific items that it highlights with signs in its stores or on its website.
As earnings season begins to wind down, Target will report its quarterly results on Wednesday and appears to be betting that the price cuts will contribute to a positive outlook going forward.
Budget supermarket chain Aldi also reduces prices
Aldi is known for selling various imitation products at significantly reduced prices. Pictured, Pringles on the left and the Aldi knockoff product on the right.
It said Monday that the discounts will be spread across dozens of national brands, as well as Target’s own brands, the company said, adding that these new discounts are in addition to price cuts it had already planned for Memorial weekend. Day.
A brand of pizza will go down 20 cents and bagels will go down 40 cents.
Other key foods, such as meat, bread, fresh fruits and vegetables, will be discounted during Memorial Day weekend. Soft drinks, various snacks and yogurts will also drop in price, Target said.
Meanwhile, Aldi said it would donate $100 million in savings through Labor Day by further reducing their everyday low prices on more than 250 items.
“Aldi is always looking for ways to help customers save money, but with more experts warning of persistent inflation, the time was right to offer even deeper discounts on our already low prices for the second year in a row,” said Dave Rinaldo, president at Aldi USA
Walmart on April 30 introduced a private label food line of 300 items, 70 percent of which are priced under $5.
Meanwhile, Kroger said in March it planned to add more than 800 items to its ‘Our Brands’ private label products, while Target is adding hundreds of new items to its ‘Favorite Day’ and ‘Good & aGather’ private label food brands. ‘.