Target Is the Latest Store to Go on a Price-Slashing Spree

Target is the latest major retailer to announce broad price reductions as stubborn inflation continues to weigh on the budgets of everyday Americans.

The box-store behemoth said Monday that it has already slashed prices on 1,500 popular products, including many grocery staples, with “thousands more price cuts” planned for the summer. In total, about 5,000 products will be discounted once the plan is in full effect.

"We know consumers are feeling pressured to make the most of their budget,” Rick Gomez, an executive vice president at Target, said in a statement.

The discounted items include many essentials, such as milk, bread, veggies, yogurt, coffee, pet food, paper towels and more. The changes affect some name-brand products from well-known companies like Huggies, Pepperidge Farm and Clorox as well as Target’s own private-label brands, which include Good & Gather and Everspring.

The price cuts are in addition to seasonal promotions slated for Memorial Day and the Fourth of July. Target estimated that the lower prices will add up to millions of dollars of savings, collectively.

The strategy also doubles as a way for the retailer to lure back inflation-weary customers.

Why is Target lowering its prices?

Though the inflation rate for April was slightly lower than expected at 3.5%, it lingers well above the Federal Reserve’s preferred rate of about 2% in the long run. Month after month of price growth — albeit much slower than at the 2022 peak — continues to eat into Americans’ budgets.

According to the National Retail Federation, a retail lobbying group that represents Target and other retailers, persistent inflation is contributing to fatigue from consumers, causing them to be more selective with their spending.

Target is not immune to the trend. The company’s latest earnings report, which was released in March and looks at the final three months of 2023, reveals the retailer has been grappling with sluggish sales — and looking for ways to reverse them.

"While there are some encouraging signs in the economy, there are also stubborn pressures impacting families," Christina Hennington, Target's chief growth officer, said on a March earnings call. "Consumers say they still feel stretched, they're balancing a lot and having to make trade-offs.”

In a similar bid to woo budget-conscious shoppers, Target debuted a new private-label brand called Dealworthy in February. The no-frills brand name includes about 400 items like paper towels, disposable plates, cotton balls, underpants, toothbrushes and other essentials priced mostly under $10.

Other retailers cutting prices

In recent months, several other grocers and retailers have lowered their prices for similar reasons: Inflation pushed some shoppers away. Now, those companies want them back.

For instance, Walmart, Ikea, Whole Foods, Giant Food, Michaels and Aldi have recently announced or implemented broad price reductions in an effort to drum up business from folks who may have previously been turned off by soaring price tags.

“Freight costs are lower, and input costs are also moderating, so retailers can afford to take those lower costs and pass them on to the consumer,” Mickey Chadha, vice president of corporate finance at Moody’s, previously told Money.

Price cuts may have also been spurred by mounting pressure from the White House. For months now, President Joe Biden has blamed lingering inflation on the greed of major corporations and urged retailers to use their record profits to bring their prices back down.

Alas, even though some retailers are starting to do just that, Chadha said it’s unlikely that prices will ever fall back to where they were before the pandemic.

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