USA – Retailer Target has announced plans to slash the prices of thousands of basic consumer goods in the summer as high inflation eats into customer budgets, forcing them to scrounge for value deals. 

The price reductions currently apply to around 1,500 consumer goods and are expected to include more than 5,000 other essential household items. 

Target revealed these price cuts will be rolled out in the summer after agreeing with partnering brands and determining prices for some of its in-house brands.  

The price cuts are part of Target’s strategy to cater to the needs of a customer base struggling to cope with the high prices of groceries and FMCGs. High inflation means pricing is the most important value source for customers.  

Target missed earnings and sales estimates for Q1 2024 as sales declined 3% year over year, warranting such a response. 

The company reveals the decision on the price cuts was made after it noticed many of its customers were switching to private label brands sold in outlets and other retailers because they are comparatively less expensive.  

“These reductions are in addition to our everyday low prices, which we routinely adjust to be competitive in the market and make sure you enjoy great value every day,” the retailer said in a statement.  

Inflation increased in the first half of 2024 after a slight reduction in the second half of 2023, which has caused customers to be more frugal in their spending. 

The latest inflation analysis predicts a slight reduction. However, how this predicted ease of inflation will affect the retailer is still being determined. 

The retail and food service sectors have struggled with a dwindling customer population as inflation soared, heightening competition among players. Many companies in the sectors have resorted to value deals to maintain market share amid customer spending pullbacks. 

However, many players in the retail industry still need to strike a balance between maintaining profit margins and market share as they, too, struggle with increased operational costs. 

Although market analysts welcome the price cuts and value deals, they warn that they may not be sustainable in the long term and that a market correction is necessary. 

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