Target slashes prices, reports sales decrease

By April Berthene

May 28, 2024
Target sales dip, loyalty program, slash prices

Target will lower the price on 5,000 of its frequently purchased items across its assortment within the next few months, the retail chain announced May 20. Target said it already reduced the prices on 1,500 items.

The mass merchant lowered prices on products including milk, meat, bread, soda, fruit, vegetables, snacks, yogurt, peanut butter, coffee, diapers, paper towels and pet food.

“These cuts are focused on every(day) items in our food and essential categories and are designed to help our guests make the most of their budgets,” CEO Brian Cornell told investors on an earnings call according to a SeekingAlpha transcript.

The retail chain made the pricing announcement two days before it reported a sales decrease for its fiscal first quarter earnings ended May 4. Target reported:

  • Total revenue decreased 3.1% year over year in its fiscal Q1.
  • Comparable sales decreased 3.7% year over year.
  • Digital comparable sales increased 1.4% year over year.

Target attributed the sales dips to shoppers spending less in discretionary categories, such as home goods.

Target’s Drive Up sales bring in $2 billion in Q1

Online sales growth was buoyed by shoppers using buy online, pick up in store and curbside pickup, which Target calls Drive Up. Shoppers purchasing via Drive Up increase 13% year over year in the quarter.

“Altogether, at more than $2 billion in Q1, Drive Up sales were more than 30-times larger than we saw in the first quarter of 2019,” Cornell said.

Curbside pickup is only available in Target’s app, which Christina Hennington, executive vice president and chief growth officer, described as the “connective tissue across most of our transactions.” Shoppers use the app in store to check prices, compare products and navigate to products, she said.

“Around half of guests that open the Target app on a given day make in-store purchases with us that same day,” Hennington told investors.

Target revamps its loyalty program

Within the quarter, Target launched a new paid membership program called Target Circle 360. The program costs $99 annually or $49 if shoppers already have its store-branded credit card.  

Program members receive unlimited same-day delivery on products such as groceries, free two-day shipping on hundreds of thousands of products, an extra 30 days to return products and same-day delivery from the dozens of retailers on the Target-owned Shipt marketplace.  

This is the first time the retail chain has introduced a paid membership program.  

“Our guests tell us they find the program easier to use, appreciate the clarity of the promotions offered, and understand the value provided with their membership,” Hennington said.

Target’s free loyalty program, Target Circle, has 100 million members, Cornell said. Plus, Target added more than 1 million new Circle members in Q1.

“We feel very good about the initial reaction from our guests to the relaunch of Target Circle. We think that’s going to be an important traffic and growth driver over the balance of the year,” Cornell said.  

Target’s goal is to dramatically grow membership for Target Circle 360, which Cornell called its approach to same-day delivery.  

Generative AI boosts conversion at Target 

Target recently tested a generative artificial intelligence to offer personalization to shoppers in personal care categories.  

“We’re very encouraged by early test results, which showed a nearly three times lift in conversion rates from personalized promotions versus mass offers, including higher sales lift across the rest of the category as well,” Hennington said.