• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Editor's Pick Target, McDonald’s and others are offering value as they lose ground with bargain hunters
Editor's Pick

Target, McDonald’s and others are offering value as they lose ground with bargain hunters

by May 24, 2024
by May 24, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Target’s weak quarterly earnings underscored why it cut prices on thousands of household staples: it’s struggling to win over bargain hunters.

The discounter is not alone.

Target’s first-quarter results on Wednesday not only show American consumers are more selective about spending after sustained inflation squeezed their budgets for nearly three years. The company’s declining sales also illustrate how the battle for shoppers’ wallets has heated up as retailers — and even some restaurants — race to outmatch each other on low prices.

Walmart said last week that its grocery “rollbacks,” short-term deals on specific items, were up 45% year over year in April. The discounter also introduced a new premium grocery brand with most items under $5. Earlier this month, Aldi dropped prices on more than 250 items, including chicken, steak, granola bars, and frozen blueberries. And even McDonald’s is debuting a limited-time $5 value meal in late June as some diners scoff at the price of fast food.

Target made its move on Monday, saying it has already reduced prices on about 1,500 items and plans to cut prices on thousands more this summer. Many of those cheaper items are staples, such as milk, peanut butter and diapers.

Multiple major grocers and restaurants cutting prices or offering deals could offer relief to consumers, at a time when consumer prices are still climbing more than 3% from last year. It could also give the Federal Reserve more confidence to cut interest rates. Even so, the revenue lost from lower prices could force businesses to cut back elsewhere — potentially on labor costs.

Analysts on Target’s earnings call on Wednesday asked about the timing and reasoning behind the price cuts and whether Target or its vendors are picking up the tab. The company declined to share details of that split, but Chief Growth Officer Christina Hennington said Target’s vendors know the company is committed to passing on savings to its customers to drive traffic.

Some businesses have held on to customers even with the same or higher prices: Chipotle and Sweetgreen, for example, have bucked the consumer slowdown.

Target’s results on Wednesday revealed at least part of the reason why it is joining the race to cut prices. Sales of discretionary merchandise, such as clothing, dropped year over year. But so did sales of higher frequency items like groceries and paper towels.

Some customers may be making those purchases at Walmart instead. Transactions on Walmart’s website and stores rose 3.8% in the most recent quarter, and its e-commerce purchases shot up by 22% in the U.S., the company reported last week.

In an interview with CNBC, Walmart CFO John David Rainey said the company is gaining share from higher-income households. He added some consumers are coming to its stores for meals because of sticker shock at fast food chains.

“We’ve got customers that are coming to us more frequently than they have before and newer customers that we haven’t traditionally had,” he said.

On Target’s earnings call, analysts asked tough questions about whether the retailer is losing ground with shoppers or is seen as too pricey, outside of sales events.

CEO Brian Cornell said Target is putting value front and center as it fights to get back to growth.

“We want to make sure America knows that Target’s a great place to shop and we have great value every time you engage whether it’s in-store or through our digital channels,” he said, adding that the company is on track to reverse sales declines in the second quarter.

When Target cuts prices, customers have noticed and responded, Hennington said on the earning call. For example, it noticed it didn’t have low-priced tech accessories that customers wanted, such as charging cables and phone cases, she said.

Those items became part of Dealworthy, a new private brand launched in February that offers Target’s lowest prices on basic items like laundry detergent and paper plates.

“When we introduced the right price points in Dealworthy, the guests noticed immediately and that drove unit and traffic acceleration in those categories and that’s what we’re doing business by business,” she said.

It’ll soon run a similar play with seasonal items, she said.

After Target “took a hard look at some of the most popular products from last year’s summer assortment,” customers can expect to see cheaper pool noodles, floats and coolers.

— CNBC’s Amelia Lucas contributed to this report.

This post appeared first on NBC NEWS
You Might Also Like
  • Southwest to get rid of open seating, offer extra legroom in biggest shift in its history
  • Philadelphia Fed President Patrick Harker advocates for interest rate cut in September
  • Delta CEO says carrier went ‘too far’ in SkyMiles changes, promises modifications after frequent flyer backlash
  • Quectel Announces RedCap Rx255C Module Series to Help Expand the Reach of 5G into More IoT Applications and Verticals
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Collapse of fintech firm with 10M users leaves many Americans without access to their money
next post
Frontier CEO urges crackdown on ‘rampant abuse’ of airport wheelchair service

You may also like

Berg Insight says 31 million North Americans used connected care...

December 6, 2022

Quectel Launches Wi-Fi HaLow Module to Address Extensive Indoor and...

March 15, 2023

Inflation rate falls to 2.9% in July, adding to signs...

August 15, 2024

The U.S. economy grew at a 3.3% pace in the...

January 27, 2024

Honda recalls more than 2.5 million cars over potential fuel...

December 23, 2023

DOJ and FTC warn consumers of fraud and price gouging...

October 10, 2024

Chocolate expected to get more expensive as cocoa prices soar...

June 14, 2023

From pandemic struggles to St. Patrick’s Day crowds, Mary O’s...

March 17, 2025

McDonald’s is the latest company to roll back diversity goals

January 7, 2025

Emirates’ chairman has a message for Boeing: ‘Get your act...

May 8, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right Now

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025
    • U.S. foreign tax bill sends jitters across Wall Street

      May 30, 2025
    • Amazon taps Xbox co-founder to lead new team developing ‘breakthrough’ consumer products

      May 30, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,765 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,472 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,451 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,432 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,308 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Breakouts, Momentum & Moving Averages: 10 Must-See Stock Charts Right...

      May 31, 2025
    • Leadership Rotation Could Confirm Corrective Phase

      May 30, 2025
    • Run Your Stock Portfolio Like a Pro Sports Team

      May 30, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,106)
    • Investing (538)
    • Stock (2,581)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    JetBlue talking to ‘multiple airlines’ about...

    February 20, 2025

    Target says its holiday sales were...

    January 16, 2025

    On the sidelines of a pricier...

    May 5, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here