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In case you couldn’t tell: The inflation-weary shopper is weary-weary.
The latest evidence? In its most recent earnings report, Target posted a year-over-year sales decline, while comparable sales, or same-store sales, fell 3.7% for the quarter ending on May 4. That marked the fourth straight quarter of declining comparable sales.
During the company’s earnings call, Target CEO Brian Cornell noted that the company’s results reflected “continued soft trends in discretionary categories.”
But there are signs of hope. Target kept its full-year forecast, with comparable sales expected to come in flat or up 2%, which would mark its first uptick in over a year.
Earlier this week, the Minneapolis-based retailer said it would reduce prices on up to 5,000 commonly-purchased items over the course of the summer, joining a string of retailers and food companies, like Ikea and McDonald’s, which have announced recent pricing changes.
In the eyes of some retail analysts, these kinds of business initiatives could play an important role in Target’s ability to keep up with the rest of the industry.
“There is a sense among consumers that they can shop more cheaply elsewhere, which is one of the reasons there have been defections to Walmart and the overlap between the two chains has increased over the past year,” Neil Saunders, managing director of GlobalData, told CFO Brew over email.
But while he thinks the price reduction plan is “a good start at remedying the growing issue of value,” it’s unclear for now “whether it will be enough to stem the tide of customer erosion.”