Target under pressure, hopes value-hungry shoppers come to the rescue
Target is stressing value this holiday season, as consumers feel pinched by inflation. At its store in New Jersey, signs that advertise low-priced items are more prominent than in previous years.
Melissa Repko | CNBC
FAIRFIELD, N.J. — Inside of this large store in the suburbs, Target is trying to create some holiday magic for shoppers.
Christmas tunes play over the loudspeaker. Adult- and kid-sized mannequins show off matching family pajamas. Red and green pillows decorate the shelves.
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The big-box retailer is looking for some of its own magic, too. The holiday shopping period has become higher stakes for Target, after it put up disappointing earnings results for three quarters and cut its forecast for the current one. Excess inventory has dragged down the company’s profits, as sales have slowed.
Target is competing in an environment where retailers must work harder to get inflation-weary consumers to spend. Its huge Covid pandemic gains are at risk as middle- and upper-income shoppers spend money on other expenses, such as commuting, vacations, and sending kids to piano lessons and soccer camp. Many already replenished their closets and sprung for big-ticket items like flat-screen TVs, leaving fewer items on the wish list. And even wealthier households are turning to discounters like Walmart, which are known for cheaper groceries.
Other retailers are under pressure, too. Kohl’s, Under Armour and Gap are all navigating the season while looking for new CEOs. Bed Bath & Beyond is trying to revive its business, as it shrinks its store footprint and workforce. Nearly every retailer is trying to get inventory in a cleaner position, while juggling both unwanted goods and more price-sensitive shoppers.
But Target is by far the biggest company of these, with a market value of around $66 billion, and it has a lot on the line. Shares of Target has fallen more than 37% so far this year. That stock slump came after Target in May missed fiscal first-quarter earnings and in June warned it would take a hit to profits as it marked down merchandise.
Target has more than 1,700 toys that are exclusive to its stores and website this holiday season. It also has a deal to sell items from storied toy brand FAO Schwarz.
Melissa Repko | CNBC
Bigger price signs, fresher merchandise
On a recent tour of the Fairfield store, Chief Merchandising Officer Jill Sando pointed out a big sign touting Target’s holiday price match guarantee, displays with bigger price signs and low-priced gifts sprinkled throughout the sales floor, from $5 scrunchies to $20 necklace-and-earrings sets.
“We want to celebrate value,” Sando said. “When we talk about affordable joy, you see the pride in the work. You see the pride in the product. We’re not whispering it. We’re shouting it.”
Target is also trying to cut through the noise of a more promotional holiday season. The big-box player, which has a reputation for cheap chic, has struck exclusive deals with brands and created its own…
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