As everyday low-price operators like Aldi, Lidl and Walmart continue to hold court atop the RDSolutions Super KVI ranking, they may have one more retailer to thank in addition to traditional high-low supermarket chains.
Target late last month ended its longtime guaranteed price match for Walmart and Amazon, opting instead to only match its own in-store and online prices.
Minneapolis-based Target, which came in 12th on the latest Key Value Items ranking for August, certainly has cause for concern in matters of pricing.
Target’s quarterly earnings call last month included a full-year outlook that projected another annual sales decline. At that time, the retailer announced that Michael Fiddelke, its current chief operating officer, will be taking over in February as CEO after Brian Cornell, at the helm since 2014, settles into his new role as executive chairman.
Fiddelke will have his work cut out for him as he takes over following four years of flat annual sales growth. After investing so much in the grocery side of its business, Target’s amended pricing policy risks sacrificing visit behavior for anticipated margin gain if more of its shoppers defect to EDLP operators for their grocery needs.
When it comes to pricing for its KVI basket (the products most influential to a shopper’s value perception), Target historically ranks better than many traditional supermarket chains but still is priced higher than regional operators like HEB, Wegmans and Meijer.
Investments in online and delivery services as well as its private brands have made Target more attractive to omnichannel shoppers. But its sluggish sales performance indicates that its efforts are not resonating as well as Wall Street would hope.
Analysts have suggested several reasons why shoppers are falling away from Target: The retailer is losing its trendy edge. Leaner store staffs contending with both in-store and online business have left shelves emptier and checkout lines longer. Cuts in costs and DEI initiatives have left the retailer struggling to maintain an identity.
Backpedaling on its price-match policy suggests Target may be letting Wall Street pressure influence its decisions on how to attract customers.
For detailed information on how Target and other grocery retailers rank in delivering value and securing loyalty, read RDSolutions’ latest monthly Retail Pricing Insights Report for August: https://hubs.ly/Q03JYXmZ0
