Shoppers Are Spending Less According to Target CEO

Target’s CEO has taken the spotlight to discuss the retailer’s current situation.

Brian Cornell, CEO of Target, revealed that consumer spending is witnessing a downward trend, including in the grocery segment, owing to increased budgetary stress among shoppers. During his recent conversation with Becky Quick on CNBC, which aired on Thursday morning, Cornell emphasized the continued slump in the sales of discretionary items like clothes and toys, marking a seven-quarter streak of declining sales in both dollar and unit terms.

Cornell noted a distinct change in holiday sales patterns compared to previous years. At the peak of the COVID-19 pandemic, the company struggled with inadequate stock due to supply chain disruptions caused by the pandemic. However, last year, an excess of unsuitable inventory posed a similar challenge.

“We’ve taken a much more conservative approach in planning inventory this year. But we’re going to lean into those big seasonal moments and play to win, when we know the consumer is looking for something that’s new, looking for affordability, looking for that special item for the holiday season.”

Target CEO Brian Cornell via CNBC

Target CEO Braces for a Rough Season

Target is adopting a conservative outlook amidst the economic uncertainty, seeing as consumers are managing their budgets more carefully, according to Cornell. The company revised its annual sales and profit forecasts downward in August, even as many economists amended their recession prognoses and government statistics indicated a slowdown in inflation.

Even with this more moderate approach, Cornell said the company still plans to gear up for the pivotal holiday season. He noted that shoppers have often spent more on purchases during “seasonal moments,” like Mother’s Day and Halloween, which could help them during the upcoming holidays.

Target is due to announce its third-quarter earnings on Nov. 15.