Will price cuts at Target, Walmart actually attract value-focused consumers?

By Ryan Daily

- Last updated on GMT

Source: Getty/Tom Werner
Source: Getty/Tom Werner

Related tags Target Walmart Price

As consumer sentiment on the economy slumps, retailers are adjusting their pricing strategies in the hopes of attracting shoppers back into their stores, while CPG brands can capitalize on demands for better-for-you products, Bryan Gildenberg, managing director of strategic growth for Coresight, told FoodNavigator-USA.

“Everybody is impacted by inflation. Rich people do not go to the store and see different prices, but they are impacted differently,” Gildenberg said. “Inflation makes value more important to everyone, but there are shoppers that want value and shoppers that need value, and those shoppers are different in terms of how they tend to behave.”

‘Pricing has been an exercise in survival rather than strategy’

Last month, several large retailers slashed their prices on everyday items to attract consumers back into their stores, after several years of price increases to combat inflation and consumer sentiment continues to tick down.   

During Walmart’s Q1 2025 earning call​, C. Douglas McMillon, the company's president and CEO, noted the retailer is "making progress lowering prices.” In May, the retailer rolled back prices on approximately 7,000 of its 100,000 items sold in the store.     

Shortly after, Target reduced​ its price on approximately 5,000 frequently purchased items, including produce, soda, bread, snacks, yogurt, peanut butter and coffee as well as non-food and beverage items. Similarly, Amazon and Walgreens announced similar cuts to their product assortments.  

"The consumer generally speaking is spending less on stuff they do not need because the things that they need cost more. ... The impact has been a little inconsistent and certain retailers get really hurt by that construction, notably Target," Gildenberg said.

He added, "For the last couple of years during inflation, pricing has been an exercise in survival rather than strategy. [Retailers] were just trying to understand what they think the consumer can bear from a price increase point of view ... usually that is not the way retailers like to price. Retailers like to put a bit more science behind it.”   

Consumers are less optimistic, regardless of demographics

Having dealt with high food prices for the last several years, shoppers are becoming more pessimistic about the economy, which is impacting what they shop for, Gildenberg explained.

Last week, the University of Michigan​ released its consumer sentiment survey, which showed consumer sentiment in June reached the lowest point in seven months. The June index read 65.6, compared to 69.1 in May.

This drop in sentiment comes as inflation cooled in May, with gasoline dropping and grocery prices remaining unchanged, according to the Consumer Price Index​. The all-items index rose 3.3% for the 12 months ending May, slightly less than the 3.4% increase for the 12 months ending April.

“What we see at CoreSight is that the American shopper has become significantly less optimistic over the first five months of the year. ... You look at the data [for] older rural shoppers and younger shoppers — younger urban shoppers are more optimistic than all the rural shoppers — but that mood swing has been more pronounced in younger urban shoppers. The gap in optimism between younger urban shoppers and older rural shoppers is actually narrower,” Gildenberg said.

Consumers will pay more for free-from products

Despite high food prices, consumers are willing to spend more for better-for-you and free-from products, creating an opportunity for CPG brands to capitalize on the premium associated with these products, Gildenberg noted.

“People are willing to pay more for a specific ingredient configuration. Whether that is vegan, gluten-free [and] lactose-free, there are more people who are more concerned about what to not put in their bodies ... and people are prioritizing that as well as natural and organic,” he explained.

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