After raising grocery prices 27% since 2020, outpacing the 22% rate of inflation in that time, stores are beginning to temper their prices, The Washington Post reports.
Target and Aldi recently announced they will cut prices on thousands of items, while Walmart has announced a new food lineup featuring products under $5.
Target touted that cutting prices on 5,000 daily essential items — including milk, produce, bread, coffee, diapers and pet food — will “collectively save consumers millions of dollars this summer.”
The moves come as these big-name retailers’ profits have been hit as inflation-weary customers shop elsewhere, especially in bulk.
Retailers have taken note and are “trying to get back to growth,” says Coresight Research analyst Bryan Gildenberg.
Neil Saunders, managing director of GlobalData, concurs: “From our data, Target has lost some customers and share in grocery and particularly in household products.
“There is a sense among consumers that they can shop more cheaply elsewhere,” Saunders continues. “This dynamic partly explains why Target is investing more in value by reducing prices on key items.”
Indeed, Target Chief Growth Officer Christina Hennington told investors on the store’s Wednesday first-quarter earnings call that passing savings back to customers is intended to “accelerate traffic and unit growth over time.”
In Walmart’s case, new, higher-end customers have been frequenting the store, and the retail giant is looking to keep them coming back with its new private label Bettergoods.
Meanwhile, more customers are going into debt to buy their groceries. Many are using credit cards, payday loans, savings and Buy Now, Pay Later services to afford essentials, not least of which is food, according to Washington economic think tank Urban Institute.
Further, 7.1% of those who used a credit card could not make the minimum payment, according to Urban Institute.
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