Take a closer look at Target’s sales bag over the last quarter, and you will see a lot more groceries.
It’s a trend the retailer is determined to cash in on as more shoppers become more finicky with their purchases during times of inflation. The essentials are what’s selling.
During its quarterly financial results call on May 17, Target announced slight increases in total sales (up .5% compared to a year ago) and sales at stores open for at least one year (.7%). However, profits took a dive (down 5.8%) and adding velocity to the plunge were the sales of discretionary items, which in some categories declined by double digits during the quarter.
The only positive came from food and beverage sales, which were up in the high single digits. Last year, just 21% of Target’s revenue were tied to groceries, but officials seem ready to shift the strategy. It’s also important to note that home and beauty accounted for another 28% of the revenue pie. Meanwhile, Walmart’s grocery sector accounted for 60% of total sales.
While shoppers try to fulfill their grocery list for the week, Target is banking on some of them straying over to discretionary items either at a physical store or online.
Competing, though, comes down to price, and a recent report from Reuters showed Walmart was able to keep costs relatively stable during a torrential period of inflation.
Walmart’s influence might be better explained following a lawsuit filed by consumers and retailers involving Energizer batteries. According to the lawsuit, Walmart pressured Energizer to inflate battery prices for competitors and required retailers not to undercut Walmart in price back in 2018.
Could it still be happening in the grocery sector? There is no hard evidence showing that is what indeed is going on, but Walmart is doing something to remain price king during the worst dose of inflation in decades. The Reuters report shows data from Dataweave looked at prices of 589 name-brand products covering 34 categories. Coffee, soup, cereals, baking goods, batteries, personal care items, pet food and other areas were looked at daily between January 2022 and February 2023. Inflation during the study averaged 7.5% while Walmart kept its prices relatively lean. Walmart stores and Walmart.com showed a price increase of about 3% while the same products showed a spike of 7.5% on Amazon and 9% at Kroger and Target.
Dataweave broke it down even further by taking a look at a sample basket of 10 food items between January 2022 and February 2023. Pringles potato chips, Miracle Whip and Del Monte Green Beans were among the products in the basket, and Walmart’s prices were 4.6% lower than Target, 14.8% lower than Kroger and 17% lower than Amazon.