MINNEAPOLIS, Minnesota: Target said it is cutting prices on more than 3,000 products across categories, including apparel, home goods, and everyday essentials, as it seeks to attract shoppers in an increasingly competitive retail environment.
The move comes as the big-box retailer works through a turnaround under new CEO Michael Fiddelke while facing broader economic uncertainty that has weighed on consumer-facing companies.
Target has struggled to keep pace with rivals such as Walmart, in part because weaker consumer spending has hit demand for some of its higher-priced merchandise.
Other retailers are also leaning on price reductions to attract budget-conscious shoppers. Walmart and U.S. grocery chain Kroger have lowered prices on essential goods, including groceries, as customers become more sensitive to rising costs.
Target's stock valuation reflects the pressure. The company's forward price-to-earnings ratio for the next 12 months stands at 14.88, compared with Walmart's 42.06, Costco Wholesale's 46.07, and Kroger's 13.60.
Rising living costs and delays in food stamp benefits have forced many Americans to prioritize essentials, prompting major consumer brands such as Procter & Gamble, Coca-Cola, and PepsiCo to introduce lower entry price points to maintain their market share.
Target has begun rolling out the price cuts both online and in stores. Among the reductions, Listerine Alcohol-Free Extra Mild Mouthwash has been lowered to US$4.99 from $5.99, while Toddler Fleece apparel is now priced at $10 instead of $12.
The retailer said the price reductions span categories including baby products, beverages, and select food items, with additional changes planned throughout the spring season.
Target had already cut prices on thousands of items last year, ahead of the key holiday shopping period, to attract value-seeking consumers.
"Target is lowering prices and introducing more newness to its assortment as it looks to drive store traffic and better compete with peers. This latest announcement is consistent with the company's investor day, where management discussed how it would fund these investments while also growing margins this year," said Arun Sundaram, analyst with CFRA Research.
Fiddelke told investors earlier in March that Target plans to invest more than $2 billion across its business this year. The spending includes $1 billion for new stores and remodels, and another $1 billion to improve the overall shopping experience.
Despite the competitive pressure, Target has forecast annual sales and profit largely above estimates after beating profit expectations in the holiday quarter.
