Target cuts prices on thousands of basic items to lure budget shoppers away from Walmart

Target will slash prices on thousands of everyday basics from bread to diapers this summer in an attempt to appeal to cash-strapped consumers.

The Monday announcement comes just a couple days before Target releases its first financials for the year Wednesday. It’s also likely a necessary counter to discount rival Walmart, which last week reported strong earnings as it continues to gain more wealthy shoppers as consumers across income spectrums try to save money.

Target has suffered in recent months as customers have cut back on discretionary shopping, and company leaders had predicted spring sales would be down compared to last year.

“We’ll be lowering prices on approximately 5,000 of your favorite food, beverage and household essentials items, a move that will collectively save our guests millions of dollars this summer,” Target said in a news release. “These reductions are in addition to our everyday low prices, which we routinely adjust to be competitive in the market and make sure you enjoy great value every day.”

Customers can look for red tags on essential items like milk, meat, fruit, paper towels and more for the lower prices. There are 1,500 price reductions already on shelves. The savings won’t just be on Target’s private-label merchandise but on brand-name products as well.

Last month, Walmart launched its premium, private-label food brand Bettergoods, which many believe is a direct swipe at Target’s nearly $4 billion Good & Gather grocery brand. Given the Bettergoods announcement, Toopan Bagchi, founder and managing director of Twin Cities retail consultancy Starship Advisors, said he wasn’t surprised to see “Target take aggressive action to remain competitive and win back its core guests.”

“Coming out of the pandemic, Walmart has consistently outperformed Target as consumers continue to struggle with inflation,” Bagchi said. “Especially troubling for Target is Walmart’s recent share gain in higher margin general merchandise from higher-income shoppers, Target’s traditionally insulated stronghold.”

Since grocery is already a low-margin business that serves more as a traffic-driver for Target, Target needs to work hard to stay competitive with pricing to bring customers into stores so they hopefully buy more than that, said Carol Spieckerman, retail expert and head of Spieckerman Retail consultancy.

“It’s critical that Target remain in step with the competition to maintain conversions to more profitable categories,” she said.