Target cuts prices on thousands of items as consumers cool on discretionary splurges

Inflation who?… Yesterday Target said it would reduce prices on 5K+ items, from Clorox wipes and Prime energy drinks to private-label milk and diapers. Unlike its grocery-heavy rival Walmart, most of Target’s revenue comes from discretionary categories like beauty, electronics, and home decor. But as inflation eats into the budget of Target’s key middle-class customers, the retailer is feeling the strain.

• Rollback: Last year, Target’s annual sales fell for the first time since 2016 as customers cut back on nonessentials like new bedding, air fryers, and flat-screen TVs. FYI: Target reports quarterly #s tomorrow.

• Rollout: Target appears to be one of the first major retailers to widely reverse price hikes that have pushed shoppers to their limit.

Shift to thrift… US consumers have stomached higher prices for years as inflation has stayed sticky. Consumer prices are still up 21% since December 2019, and Americans are hitting a wall: McDonald’s, Starbucks, Kraft Heinz, and Home Depot disappointed in Q1 as folks cut back. Over half of US consumers across nearly every income level say they’re slashing nonessential spending because of high grocery costs (grocery prices have outpaced inflation over the past four years). In January, European grocery chain Carrefour said it was pulling Pepsi products from many of its shelves after the Lay’s and Lipton parent hiked prices for seven straight quarters.