Target to cut prices on 5,000 products in bid to lure cash-strapped customers
Target said Monday it plans to slash the price of bread, coffee, diapers and thousands of other everyday items this summer, joining other retailers looking to kickstart business by catering to inflation-weary consumers.
Target is cutting its prices because "consumers are feeling pressured to make the most of their budget," Executive Vice President Rick Gomez said in a statement. Other staples being repriced include fruit, milk, meat, peanut butter, pet food, vegetables and paper towels, the Minnesota retailer said.
Target said it has already lowered the price on roughly 1,500 items, and the remaining cuts will take effect in coming weeks. The lowered prices will also be available through Target's website and shopping app.
Target, which is scheduled to release its first-quarter earnings on Wednesday, in March reported a 1.7% drop in sales for 2023 — its first annual decline in seven years.
The move comes as the U.S. economy is slowing. Although inflation continues to ease and overall consumer spending has remained solid this year, recent economic signals suggest Americans are becoming more frugal. The median rise in monthly household spending in April fell to 4.6%, the lowest reading in three years, according to data from the Federal Reserve Bank of New York.
"While there are some encouraging signs in the economy, there are also stubborn pressures impacting families and retails," Christina Hennington, Target's chief growth officer, said in an earnings call with analysts in March. "Consumers say they still feel stretched, they're balancing a lot and having to make trade-offs to meet the needs of their families while sprinkling in the occasional luxury."
The pullback in spending by budget-conscious consumers is also affecting other industries, including fast-food giant McDonald's and casual-dining chains such as IHOP and Applebee's.
In April, grocery chain Giant Food, which has 164 locations across Delaware, Maryland, Virginia and Washington, D.C., cut the price on hundreds of its private-label items. Arts supply retailer Michaels also lowered prices in April, slashing the cost of paint, markers, pens and other products.
The White House applauded actions by retailers to reduce their prices, noting that President Joe Biden met with Target CEO Brian Cornell and other chief executives last fall.
"President Biden called on grocery chains making record profits to lower prices for consumers – and they're answering the call," the White House said in a statement.