NEW YORK (AP) — Americans scouring online and stores for sales this Memorial Day may have even more reason to celebrate the arrival of warmer weather as major retailers try to lure shoppers with deeper discounts ahead of summer. Inflation-Weary Shoppers Open your wallet.
Target, Walmart and other chains have implemented price cuts, some permanent and some temporary, aimed at giving customers some relief. The cuts, mostly on food, are: Inflation showed its first signs The relief is expected this year, but it won’t be enough for consumers struggling to pay for basic necessities like rent and car insurance.
In Walmart’s most recent quarterly earnings report, Macy’s and Ralph Lauren They stressed that consumers haven’t stopped spending, but several CEOs, including those of McDonald’s, Starbucks and hardware stores, said: Home Depotis finding that people are becoming more price sensitive and picky: They are delaying purchases, turning to private label brands over national brands, which are typically more expensive, and looking for bargains.
“Retailers are realizing that if they don’t do something about pricing, they’re going to have a harder time retaining their existing customers,” said Neil Saunders, managing director at GlobalData, a consulting and data analytics firm. “Consumers are really fed up with inflation and are starting to take action around where they shop, how they shop and how much they buy.”
While discounts are common in retail, Sanders said the bold price cuts announced by many retailers across thousands of items represent a “major shift” in their recent strategies. He noted that most companies have been talking about raising prices for the past two or three years, and the cuts mark the first major “price wars” since before inflation really took hold.
Where can shoppers find cheaper prices?
High-income shoppers looking to save money Walmart The company has seen strong sales in recent quarters, but earlier this month the nation’s largest retailer expanded its price cuts — temporary cuts that can last for months — to about 7,000 grocery items, a 45% increase. Items included a 28-ounce can of Bush’s Baked Beans, reduced from $2.48 to $2.22, and a 24-pack of 12-ounce Diet Coke, reduced from $14.28 to $12.78.
Company officials said the Bentonville, Arkansas-based retailer is looking to expand its retail presence as more people Eat at home Compared to dining out, Walmart is confident the discounts will help its business for the rest of the year.
“We’re going to lead on price, manage our margins and continue to be the Walmart you’ve always known,” Chief Executive Officer Doug McMillon told analysts earlier this month.
Last week, in an attempt to beat its biggest rival, Target, Reduce prices of 1,500 items The company also said it plans to cut prices on an additional 3,500 items this summer. The initiative will apply mostly to food, beverages and household essentials. For example, Clorox scented wipes, which previously cost $5.79, are now on shelves for $4.99. Huggies baby wipes, which previously cost $1.19, are now 99 cents.
low cost The supermarket chain Aldi The company announced earlier this month that it would slash prices on 250 products, including barbecue and picnic favorites, as part of a promotion that will run through Labor Day.
McDonald’s is planning to introduce Limited time $5 meals in the U.S. next month to combat slowing sales and customer attrition Dissatisfaction with high prices.
Arco, a major operator of convenience stores in rural and small towns, has launched its first aggressive rewards in nearly 20 years for both its free loyalty program members and other customers, said Arie Kotler, chairman, president and CEO of the company. For example, Arco’s free loyalty program members can get a free pizza when they buy two 12-packs of Pepsi. The promotion began May 15 and is set to end Sept. 3.
Kotler said he observed that customers were buying less than they were a year ago due to the cumulative effect of rising gasoline prices and inflation elsewhere, and he focused on essential items people use to feed their families.
“Over the past two quarters, we have seen a trend of consumers saving money, going shopping less frequently and buying less,” he said.
Beyond food, crafts chain Michaels last month cut prices on commonly purchased items like paints, markers and canvas by 15% to as much as 40%, and Michaels said the price cuts would be permanent.
Will these cuts bring prices back to pre-pandemic levels?
Many retailers said the aim was to give shoppers some peace of mind, but Michaels said the new discounts had brought prices of some products down to where they were in 2019.
“The goal of these reductions is to ensure we deliver value to our customers,” Michaels Companies said in a statement. “We see this above all as an investment in customer loyalty.”
Target said inflation rates vary by product and markdowns vary by item, making it difficult to compare current prices of discounted items to any specific period.
According to the Bureau of Labor Statistics, which tracks consumer prices, the average price of a 2-liter bottle of soda was $2.27 in April, down from $1.53 in the same month five years ago. A pound of white bread averaged $2 last month, compared with $1.29 in April 2019. A pound of ground beef averaged $5.28 in April, down from $3.91 five years ago.
Why do companies lower the prices of some products?
US Consumer Confidence The Conference Board, a business research group, released its latest report late last month showing that the economy worsened for a third consecutive month in April as Americans continue to worry about their short-term economic future.
Retailers are trying to lure customers back to stores as shoppers turn to bargains, especially online. Target said this month that same-store sales at stores or in digital channels that have been open for at least 12 months fell for the fourth consecutive quarter.
In fact, the share of online sales for the least expensive items in many categories, including clothing, groceries, personal care and electronics, increased from April 2019 to the same month this year, according to Adobe Analytics, which covers more than 1 trillion visits to U.S. retail sites.
For example, Adobe said the market share of the cheapest grocery items increased from 38% in April 2019 to 48% last month, while the share of the most expensive grocery items fell from 22% to 9% over the same period.
How do retailers fund price cuts?
Global Data’s Sanders said companies would have to sacrifice profits, incur costs from suppliers and vendors, or By reducing expensesSome retailers may be using a combination of the three, he said.
Sanders doesn’t think retailers will raise prices on other items to make up for the ones they cut, because that would lead to customer backlash.
Target declined to disclose details but said summer price-cutting promotions were built into the company’s expected profit range, at the low end of which it would fall short of analysts’ expectations.
GPM Investments LLCis a wholly owned subsidiary of ARKO Co., Ltd. The company said its suppliers are funding the convenience store promotions.
