NEW YORK – Target, a retail giant known for its affordable yet stylish home goods and clothing, has recently faced challenges as surging prices have tarnished its reputation as “Tar-zhay.”
During the company’s latest quarter, Target reported a 3.7% drop in sales at stores open for at least one year compared to the previous year. This marks the fourth consecutive quarter of declining sales for Target (TGT), leading to a 7% decrease in the company’s stock during pre-market trading.
The decline in sales was primarily seen in discretionary categories, as customers shifted their spending habits towards essential items amid a spike in inflation. Target, often seen as a barometer for consumer spending habits, noted that its middle-class customer base has been impacted by higher prices, resulting in a preference for groceries and everyday essentials over nonessential items like home decor and electronics.
Compared to competitors like Walmart, Target has struggled due to its merchandise mix and higher prices. While Target has made efforts to include more food and essentials in its stores, it still lags behind Walmart, which generates around half of its sales from groceries.
In an attempt to attract customers back, Target has implemented strategies such as lowering prices on popular items and introducing its own brands. The retailer has slashed prices on over 1,500 items, ranging from basic household products to groceries, to appeal to shoppers wary of inflation-driven price hikes.
Additionally, Target recently launched a new house brand called Dealworthy, featuring a budget-friendly lineup of 400 items. This new brand is aimed at competing with dollar stores and Walmart, offering a variety of affordable products from phone chargers to disposable plates.
As Target continues to navigate challenges posed by inflation and changing consumer preferences, the retailer remains focused on adapting its strategies to meet the evolving needs of its customer base.