Target cuts prices on groceries and other consumables | Food Dive

Target’s announcement came the same day Kroger reported a 7% drop in profit thanks to its own sweeping price cuts. As with the Cincinnati-based grocer, Wall Street dinged Target for the measure, which is sure to eat into the retailer’s gross margins, but stands to boost its market share.

Many analysts view sweeping price cuts as a necessary step for large retailers going up against Walmart, Amazon and discounters Aldi and Lidl. For months, Target had promised to slash prices on consumables even as it was upgrading its merchandise in other departments, such as home goods and apparel.

“In our view, [Target] is following its strategy to invest in price and is taking strides to improve its value perception and increase pricing clarity, which we view as significant opportunities for the retailer to grow trips, basket, and customer loyalty,” Cowen & Co. analysts noted in an email sent to Retail Dive.

The question is, can Target offer more than just low prices on its grocery items and deliver growth over the long-term? The answer seems unclear at this point. Target’s fresh offerings have left much to be desired in recent years, with higher-than-average perishable losses and subpar store merchandising putting a damper on sales. Target’s recent earnings results show grocery was the only major division not to see comp sales increases.

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Target cuts prices on groceries and other consumables | Food Dive.