Will lower everyday prices boost Target’s traffic and sales?
On Friday, Target said it had lowered prices on “thousands of items, from cereal and paper towels to baby formula, razors, bath tissue and more” in a move to reinforce its everyday low pricing positioning.
According to a blog post, the retailer will also be reducing the number of “As Advertised!” and “Temporary Price Cut” specials that can be “super frustrating” to shoppers.
“We want our guests to feel a sense of satisfaction every time they shop at Target,” said Mark Triton, Target EVP and chief merchandising officer. “Part of that is removing the guesswork to ensure they feel confident they’re getting a great, low price every day.”
Among the promised changes:
- “Fill your cart with confidence” – Prices have been adjusted to make sure basics “from milk and eggs to crayons” are “priced right daily”;
- “Watch for simple, easy messages” – More than two-thirds of its price and offer callouts, including “Weekly Wow!” or “Bonus Offer” specials, have been eliminated to help shoppers “more easily spot the savings”;
- “Delight in the right sales” – Narrowing rather than “ditching” promotions, Target is “making sure to offer only our best, most compelling sales — when it makes the most sense for our guests.”
Target noted that the price transparency comes on top of the retailer’s “incredible exclusive brands, super-chic collaborations and one-stop shopping.” A visit to Target stores on Sunday in Manhattan and New Jersey showed little indication of the pricing changes.
Earlier this year, Target told analysts it was reducing prices to better compete with Walmart and Amazon.com. In August, Target reported its first positive comp-store gain in a year that management attributed in part to more sales being sold at regular price. Target has also found success online and with its small-format, urban stores.
Shares of Target fell $1.15 to $57.27 on Friday, reportedly due to the short-term impact of the price cuts on margins. Target’s move comes as Amazon has promised to lower prices at Whole Foods and aggressive moves by Walmart, Aldi and Lidl are expecting to drive down grocery prices.
- Past… Here’s How to Save Big During Your Target Run (And There’s No Math Required!) – Target
- Target to slash prices on thousands of items, sending shares tumbling – CNBC
- Target slashes prices on thousands of items, shares falter – Reuters
- Target’s Prices Are Getting Cheaper and So Is Its Stock – Fortune
DISCUSSION QUESTIONS: Must Target become more price competitive on an everyday basis to compete effectively? Do you think the chain’s “Temporary Price Cuts” and other weekly specials were undermining its EDLP positioning?